The latest CUA National Mortgage Survey showed that almost half of the respondents gave the wrong answer when asked what a comparison rate is, while an additional 28% did not know what it was at all.
This has caused them to miss out on the best home loan deals.
According to news.com.au, a loan comparison rate is an important tool for people to compare lenders on an even playing field. It includes loan fees, charges, and interest rates.
Banks and other financial institutions are required to display comparison rates. However, people are still not taking advantage of the freely-given information.
“Property buyers need to be careful that what looks like a very low rate doesn’t actually have lots of nasty hidden fees and charges,” said Andy Rigg, CUA chief operating officer.
The survey further showed that people who have loans with the big four banks are less likely to know what a comparison rate is compared to those who have home loans outside the big four. However, these homeowners are twice as likely to have switched mortgage providers in the past six months compared to non-big customers.
“The current low interest rate environment is encouraging some homeowners to consider locking in these lower mortgage repayments
for the next few years,” said Rigg.
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