Australians are paying more for their home loan due to complacency, at a time when mortgage-holders need the savings the most, new research has shown.
Survey data released by Canstar has shown that a quarter of mortgage-holders believe they are paying too much for their mortgage.
A further 58 per cent believe their rates could be lower but they are OK, leaving just 18 per cent of mortgage-holders with the lowest rate on the market.
Despite this, mortgage-holders are refusing to switch to a better rate, leaving many paying more during a time when they should be looking to save.
Commenting on the new findings, Canstar finance expert Steve Mickenbecker said, “Mortgage-holders are their own worst enemy. Four in five people know they are paying too much on their loan, and almost two-thirds say that it’s OK. You can’t settle for OK when it comes to your biggest bill each month.”
Mr Mickenbecker explained that mortgage-holders who are paying 3.46 per cent compared with lower 2.17 per cent rates are giving the banks $3,288 a year.
“Today’s average variable home loan interest rate of 3.46 per cent might sound OK when you remember repaying your loan at an interest rate of 8.00 per cent, but it doesn’t compare to the record-low rates of today,” he said.
The finance expert advised anyone who thinks they are paying too much for their home loan to speak with their bank about changing their rate.
“If you know your home loan interest rate is too high, now is the time to put the knowledge into action. We’ve never seen a home loan market like we have now where lenders are so keen to undercut their competitors’ rates,” Mr Mickenbecker said.
June Home Loan Insights:
- In June, there were 23 cuts to variable interest rates for home owners, and 24 for investors.
- For home owners, variable rates were cut by an average of -0.18 per cent for those paying principal and interest and -0.31 per cent for those paying interest only.
- For investors, the average cut was -0.39 per cent for those principal and interest and -0.29 per cent for anyone paying interest only.
To find out more, or to review your current loans, you may arrange a convenient time to speak to Jesse Bruno, our mortgage broker at CentraMoney by clicking here.
Article reproduced from Nest Egg by Cameron Micallef