Borrowers are spending almost $4 billion a year less on home and consumer debt servicing than four years ago and the savings will grow, despite what happens to the official cash rate this week.
With signs of a weaker September quarter, economists say there is a case to be made for new Reserve Bank governor Graeme Wheeler to cut the official cash rate on Thursday from 2.5 per cent to 2 per cent. But most think he is more likely to do nothing.
However, the recent round of fixed mortgage rate cuts will act like another nudge along from the Reserve Bank, adding to the big push started in 2008, which is still rippling through and lowering average mortgage costs.
Floating mortgage rates sit at about 5.75 per cent among the big banks, with Kiwibank offering six-month to two-year rates of 4.99 per cent, undercutting the big players on about 5.25 per cent.
Those fixed rates for new loans are much lower than the "effective" average fixed rate of about 6 per cent.
Most economists now expect the OCR to stay on hold till late next year and possibly into 2014 and any rises would only be gradual.
ASB Bank recently pushed out the first rate rise to September 2013, from an earlier forecast of June next year.
Wheeler is expected to issue just a one-page statement this week, with no scheduled press conference. His first detailed report and media conference will be on December 6.
The former World Bank managing director remains an unknown, with no track record in central banking. He has lived overseas for the past 15 years.
But he is expected to keep his powder dry and save any interest rate cut in case there is an international meltdown because of the European debt crisis, the United States economy gets worse or China slows down more than expected.
Westpac economists expected Wheeler to be "calm and cautious" and hold rates at 2.5 per cent this week, given that future inflation is expected to be bang on the middle of the target zone at 2 per cent.
But market pricing suggests a roughly even chance of a rate cut by the end of the year and Thursday's statement will be closely watched for any signs pointing to a rate cut in December.
Even if he doesn't move this week, average "effective" mortgage rates have been steadily falling and will keep going down, taking the pressure off borrowers and leaving more money in their pockets.
The average interest rate paid by mortgage holders has fallen more than 60 basis points since the end of March 2011, and will keep falling even if official interest rates are not cut, Deutsche Bank economists say.
In the year to June, households spent $10.6b on servicing the debt on their home loans, down from $14b in calendar 2008, a saving of $3.4b. The savings on consumer loan costs add more.
There is a case to be made that rates should be cut now to give the economy a push when it appears to be stalling, with manufacturing and the services sectors both going backwards, according to latest figures. Business confidence remains weak, with slower trading activity.
Inflation is extremely low. At 0.8 per cent for the past 12 months, inflation is below the central bank's target band, pushed down by a high New Zealand dollar, and heavy discounting by some retailers on items such as electronics.
Unemployment also remains relatively high at 6.8 per cent and is expected to remain close to 7 per cent, keeping a lid on wages.
On the other hand, the Canterbury rebuild finally seems to be kicking into gear, which will eventually give the economy a big boost and risks sparking wider inflation.
Annual construction costs in Canterbury are already rising almost 10 per cent.
A report out at the weekend showed the South Island economy is growing at its fastest pace for eight years, at 3.3 per cent.
"You can smell the money," Canterbury Employers' Chamber of Commerce chief executive Peter Townsend said.
The central bank will also want to avoid throwing fuel on the fire of already rapidly rising house prices in Auckland and Canterbury, by cutting rates even more.
Former Reserve Bank governor Alan Bollard slashed official interest rates massively in late 2008 as the global financial crisis hit, and the benefit of that is still rippling through household bank accounts.
In September 2008, the effective mortgage rate peaked at 8.82 per cent.
It is now down to 5.8 per cent, and is expected to keep falling, as more borrowers roll off higher fixed rates set in the past and move on to much lower floating or even cheaper new fixed rates.
In the year to June, households spent $10.6 billion on servicing the debt on their home loans, down from $14b in calendar 2008, a saving of $3.4b.
On top of that, the cost of servicing consumer loans has fallen about $500m, taking the total annual saving to almost $4b in four years.
Source: Reserve Bank