Brendan,
This confused me a bit - the reducing interest rate hasn't increased the capital repayment rate necessarily. Only if we decide to maintain a constant repayment per month will we pay the capital down quicker. Do I understand this correctly? I'm sure most people don't do this, and simply enjoy the extra cash in their pocket each month.
C
This may help as an example.
Repaying 100k at 1%
Total Monthly Payment 321.69
Sep €83.42 €238.27 €99,761.73
Oct €83.22 €238.47 €99,523.26
Nov €83.02 €238.67 €99,284.60
Dec €82.82 €238.87 €99,045.73
Repaying 100k at 2%
Total Monthly Payment 369.67
Sep €166.75 €202.92 €99,797.08
Oct €166.41 €203.26 €99,593.82
Nov €166.07 €203.60 €99,390.23
Dec €165.73 €203.94 €99,186.29
So even though you are paying less at 1%, you are taking a bigger chunk out of your principle.