How much does a 0.25% rate cut save on a mortgage?

On a $320,000 balance with 27 years left, a 0.25 point cut from 6.75% trims about $51 a month, roughly $616 in the first year, and around $16,600 of interest across the full term.

Does a rate cut lower my payment automatically?

Only on a tracker or variable loan. On a fixed rate you have to refinance to capture it, which adds costs this calculator does not include.

Personal finance

Rate cut savings calculator

Enter your balance, rate and years remaining to see the new payment, the monthly saving and the total interest a rate cut takes off your loan.

Tool

See exactly what a 0.25% rate cut takes off your monthly payment.

Loan balance$Current rate%Years remainingyrs

Size of cut

Or a custom cut%New rate: 6.50%

Monthly saving

$51.35

$616 over the first year

Payment now$2,149.12/mo

Payment at 6.50%$2,097.78/mo

Interest over the term now$376,316

Interest after the cut$359,679

Total interest saved$16,636

How this is calculated

Payments use the standard amortising loan formula: the balance is spread over the remaining months at the monthly equivalent of the annual rate. The cut version repays the same balance over the same term at the lower rate, so the difference is a like-for-like comparison.

The term stays the same after the cut — you keep paying to the original end date.
The rate applies for the whole remaining term (fixed, or a tracker that stays put).
No fees, insurance, escrow or extra repayments are included.

Common questions

How much does a 0.25% rate cut save on a mortgage?: On a $320,000 balance with 27 years left, a 0.25 point cut from 6.75% trims about $51 a month, roughly $616 in the first year, and around $16,600 of interest across the full term.
Does a rate cut lower my payment automatically?: Only on a tracker or variable loan. On a fixed rate you have to refinance to capture it, which adds costs this calculator does not include.