In spite of the record low official cash rate of 1.75 per cent, new data shows that the average Australian home owner is paying an extra 1.75 per cent more interest on their home loan than the lowest available rate.
Financial software company Pocketbooks Home Loan Insights revealed that around 90 per cent of Australians do not know what their current home loan rate is, thus costing them thousands of dollars that could be avoided had they refinanced.
"If you look at the market before the latest RBA changes, the most competitively priced home loans on offer are at or below four per cent interest and the best big four bank rates are about 4.4 per cent," said Pocketbooks CEO Bosco Tan. According to him, all mortgage holders should undertake a 'health check' on their mortgage every 24 months, which includes scrutinizing other mortgage products and getting in touch with their own mortgage broker.
Majority of mortgage holders have not switched lenders in more than a decade. "It's alarming that borrowers aren't switching home loans, particularly in a low interest rate environment," said Bessie Hassan, Finder.com.au spokeswoman.
Hence, now is also the best time to refinance, according to Pass Go Home Loans managing director Jamie Moore. "Banks are hungry for new business at present—which is evident by all the cash rebates and low rates on offer for new to bank clients. Now is a great time to take advantage of the competitive market," he said.
Refinancing is a straightforward process, usually involving a conversation with a broker and a bit of paperwork. Its cost can total up to $1,000, but it is increasingly covered by banks as a rebate.
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