Article published 24 February 2021
Try this quick quiz: What interest rate are you currently paying on your home loan? If you’re not sure, you’re certainly not alone.
In a recent survey by Mortgage Choice, only 46.5% of respondents could name their loan rate. Yet, five years ago, in 2016, over 60% of people were able to pinpoint their rate1.
What’s worrying about this trend of interest rate complacency, is that it comes at a time when many Australians face increased financial pressure as a result of COVID-19.
Six out of ten trying to save
Over 62% of Australians admit that COVID has caused them to worry more about money, with 65% trying to boost their resilience by saving more and spending less2.
We saw this in 2020, when the nation’s ‘household savings ratio’ (how much of our income we save) skyrocketed to 19.8%, up from 6% prior to the onset of the Coronavirus pandemic3.
Yet by not keeping tabs on your home loan rate, you could be letting valuable extra cash slip through your fingers.
The potential for big savings
Interest rates are at historic lows, but that doesn’t mean your loan rate is still competitive. There is a wealth of exceptional deals available right now, with interest rates that could make your loan look a little pricey.
Let's say, for instance, that you have a variable loan rate of 3.99%. By shopping around with the help of your Mortgage Choice broker, you may be able to cut that back to 3.49% – a difference of 0.5%. That may not sound like much, but on a 30-year home loan of $600,000, it could cut reduce your loan repayments by $170 each month4. That’s a lot of extra cash in your hip pocket!
The bottom line is that while some homeowners are cutting back their lifestyle in order to tuck money away, they may be overlooking easy opportunities to save through refinancing.
Knowing if you could save with a new loan starts by understanding the rate you’re currently paying. Talk to your local Mortgage Choice broker to get to know your loan rate – and discover if refinancing can help you enjoy valuable savings.