While numerous lenders have lowered their home loan interest rates following the Reserve Bank of Australia’s decision to cut the official cash rate to 1.75%, borrowers should still ensure they’re on top of the details of their mortgage.
John Kolenda, head of mortgage broking network 1300HomeLoan, said even with the latest rate cut factored in, many Australian borrowers are likely paying higher interest rates than they should.
“Home loan customers should not always be relying on the RBA,” Kolenda said.
“Complacency is costing many mortgage holders thousands of dollars a year. If you look at what has happened over the last six or seven months there's been a huge amount of movement in out-of-cycle interest rate increases by lenders. This means that there are too many Australians paying too much for their current home loans,” he said.
Kolenda said many Australian borrowers approach their home loan with a “set and forget mentality”, a practice that is becoming increasingly risky.
“Unfortunately, once people set up a home loan they often put it to one side and don't really worry about it. It's a set and forget mentality,” he said.
“But it has never been more important to review your home loan regularly and a mortgage broker can assist with this process.”
Kolenda said the need for people to take a more proactive approach is becoming more and more important as there is a strong possibility of future rate rises by lenders independent of RBA action.
“We could again see banks increasing rates outside of the RBA's deliberations or failing to pass on any reductions in full.
“This will make it even more vital to review any existing home loans because there will be potentially a greater saving.”
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan