Australians with home loans greater than 10 years old were on average paying 1.04% more than a new customer; a recent report published by the Australian Competition and Consumer Commission (ACCC) has revealed.
The Home Loan Price Inquiry report released recently has found borrowers are potentially paying more than they need to when they stick with their current bank over a long period and not asking for a better mortgage rate or switch lenders.
"A significant number of Australian home loan borrowers have not switched lenders for several years, yet they stand to save so much money by doing so," ACCC Chair Rod Sims said.
"If you are someone with an older loan, you might be surprised to know that borrowers with new loans are likely walking into the very same lender you have your loan with and getting significantly lower interest rates."
The report highlighted several key customer segments affected, according to the length of time when the loan was first taken out.
- borrowers with home loans between three and five years old were, on average, paying around 0.58% above the average interest rate for new loans
- borrowers with home loans between five and 10 years old were, on average, paying around 0.71% above the average interest rate for new loans
In contrast, by reducing your home loan interest rate by just 1%, you could easily save well over $9,000 in just 3 years or $47,000 over fifteen years.
"This is serious money, you can’t save that much for shopping around for petrol or electricity but you can on your home loan," Mr Sims said.
Clearly, anybody with a mortgage rate above 3% should actively pursue a better deal.
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