Do my loan repayments automatically reduce if the variable rate drops?

LoanCaddie
Feb 21
2 min read

Updated: Mar 4

You would think that your repayments should automatically reduce when the rate drops. It actually depends on which lender you are with. Below is a compiled list of answers from each lender.

Below is a list of what happens depending on your lender.

If you’re making Principal & Interest repayments on your loan and your lender announces an interest rate drop, nothing generally happens to your loan repayments – for a while at least anyway. With most lenders, unless you ask for a change to your repayments, your minimum monthly repayment stays the same but since you’re now charged less interest, each repayment consists of a higher proportion of principal.

In all instances, your lender will notify you of any change to your interest rate change, changes to you minimum repayments and if action you need to take to change your direct debit repayments.

AMP - Automatically reduced.
ANZ - Customer needs to call and get them to update repayment.
Auswide Bank - Automatically reduced.
Bank Of Queensland - Automatically reduced.
Bankwest - Automatically reduced.
Better Choice Home Loans - It depends.If they have direct debits set up, then they will need to call the bank to have the repayments changed.
Commonwealth Bank - Customer needs to call and get them to update repayment.
Connective Advance (Thinktank) - Automatically reduced.
Heritage Bank - Automatically reduced.
ING - Automatically reduced.
Macquarie Bank - Your repayments will automatically change in the following month.
ME Bank - Customer needs to call and get them to update repayment.
NAB - Customer needs to call and get them to update repayment.
Newcastle Permanent - Automatically reduced.
Resimac - Customer needs to call and get them to update repayment.
St George Bank - Automatically reduced.
Suncorp Bank - Depends on the amount. If the loan repayment is to reduce by more than $50 then automatically done. If the reduction is less than $50, no change can be made to monthly repayments (additional cash to go to principle rather than interest).
Teachers Mutual Bank - Customer needs to call and get them to update repayment.
Ubank - Customer needs to call and get them to update repayment.
Virgin Money - Customer needs to call and get them to update repayment.
Westpac - Customer needs to call and get them to update repayment amount.