Mortgage Choice is calling for mortgage comparison rates to be scrapped, as they are fast becoming irrelevant to brokers and borrowers.
Fewer customers are relying on them or referring to them. In view of this trend, Mortgage Choice welcomes a formal review into their ongoing relevance.
Comparison rates were introduced in 2003 under the Uniform Consumer Credit Code to help borrowers understand the true cost of their mortgage. However, they don't provide consumers with a complete picture of all the costs associated with a mortgage. Comparison rates do not include exit fees, event-based fees (such as early repayment or redraw fees), some ongoing costs as well as government fees and charges.
Moreover, making a home loan choice based on interest rate alone can have its pitfalls, especially during periods of interest rate volatility. Borrowers must be mindful that today's cheapest loan may not be tomorrow's.
Borrowers now find greater value in having access to additional home loan features, such as redraw, offset accounts, direct debit facilities and so on. These loan aspects can make a significant difference to the overall cost and suitability of the loan.
It's a good idea to closely compare all of a loan's features and fees before choosing a home loan.