December 19, 2017
Almost 40% of Australians do not know the interest rate on their home loan, new data has revealed.
Mortgage Choice’s Australian Financial Savviness Whitepaper found 38% of Australians did not know the current interest rate on their mortgage.
“The fact that two in five Australians do not know the interest on their mortgage is alarming,” Mortgage Choice chief executive officer John Flavell said.
“It seems for many borrowers it is easy to take a set and forget attitude towards their mortgage. However, this can end up costing them substantially over the longer term.
“A home loan is one of the biggest financial investments a person will make in their lifetime. And, if they don’t review it on a regular basis, they could end paying a lot more than they should.
“In the past two years the cash rate has been reduced by 50 basis points and a huge portion of this has been passed onto mortgage holders in the form of lower rates. As such, anyone who hasn’t reviewed their mortgage in the past two years could find that the interest rate on their home loan is significantly higher than it needs to be.”
According to the Whitepaper, Australians over the age of 60 were the most likely to not know their home loan interest rate, with 46% admitting that they did not know the interest rate on their mortgage.
Just over 40% (40.4%) of those under the age of 30 did not know their mortgage interest rate, while 36.9% of those aged between 30 and 39 years said they were in the same boat.
Mr Flavell said borrowers needed to keep up to speed with their mortgage as lenders regularly make adjustments to the interest rates on their home loan products.
“In recent months, we have seen many of Australia’s lenders adjust the pricing across their owner-occupied and investment home loan products,” he said.
“These slight changes can make a significant difference to what a borrower has to pay each month.
“For example, the monthly repayments on a $500,000, 30-year home loan with a principal and interest mortgage rate of 4.5% would be $2,533. If the interest rate was to come down by 50 basis points, the monthly repayment would be $2,387 – which equates to a saving of $146 a month.
“Those borrowers who don’t want to miss out on savings are advised to review their mortgage at least once a year.
“Most importantly, they should be speaking to a mortgage broker who can assess their current home loan and ensure that they are in the best product with the most competitive interest rate for their needs.”
