Almost 40% of mortgage holders have admitted that they have not changed lenders in the past decade in search of more affordable rates, according to a survey by finder.com.au.
Moreover, this behavior could cost borrowers around $9.9 billion, given current mortgage market conditions.
Mortgage customers of Australia’s big banks, numbering in the millions, found themselves paying even more interest following the variable interest rate hikes implemented recently. The off-cycle increases came at a time when the Reserve Bank kept the cash rate at 2%.
By switching to or negotiating for a variable home loan rate just 0.1 percentage point below the average of 5.2%, mortgage holders can potentially save $8,415 over a 30-year loan term, based on the national average mortgage size of $379,400.
"We're seeing the cheapest home loan deals ever and it's now more affordable to switch lenders since the banning of excessive exit fees to variable home loans in 2012," remarked Bessie Hassan, consumer advocate for finder.com.au.
Hassan shared data regarding the home loan market, revealing that refinanced loans represent 34% of all home loans written. The figure shifted between 31% and 34% since the credit reforms were implemented, but such fluctuations were marginal at best.
With the average variable rate of the country’s four major banks at 5.61%—0.4 percentage points higher than the overall average among all lenders—the percentage of customers refinancing their loans, along with the number of customers looking to change to better deals, is likely to increase.
There are over 156 home loans with rates lower than the 5.2% average. Yellow Brick Road’s rates are at a staggering 3.91%, and three banks—CUA, Mortgage House, and Bank of Queensland—are offering loans at 3.99% rates.
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