Lazy Aussies at fault for poor mortgage rates
ONE in two Australians believe they are good negotiators yet are failing to take action to make significant savings on one of their biggest expenses - their home loan.
The Reserve Bank of Australia kept the cash rate on hold at 1.5 per cent this month but both fixed and variable rates continue to fluctuate, which should prompt borrowers to demand a better deal.
Online home loan platform Lendi found one in two Australians consider themselves to be good at driving a competitive deal, but only 41 per cent of home loan customers had bothered to take action and negotiate their interest rate.
Lendi's co-founder David Hyman said that many bank customers don't realise the bargaining power they have.
"The banks will really want to keep them as customers and so they need to make sure they are comparing everything out there in the market,'' Mr Hynan said.
"If home-owners go into the negotiation with that in mind, it's a strong position to be able to take.
"Don't just look at the rate, but make sure you have the right set-up on your loan, particularly with changes around owner-occupier and investor loans and principal and interest and interest-only deals."
The financial regulator, the Australian Prudential and Regulation Authority, has cracked down on investor loans and interest-only lending, which has resulted in rates on these types of loans increasing.
But for owner-occupiers on a principal and interest deal with a loan-to-value ratio less than 80 per cent, they are in the best position to score a better rate and they should make sure it has a "3" in front.
The Customer Owned Banking Association's chief executive officer, Michael Lawrence, said that new mortgage customers should make sure they know how to compare loans.
"When you go and see a lender they need to provide a key fact sheet that provides information and makes comparisons on repayments, fees, charges and rates which helps the customer compare,'' he said.
"Use mortgage calculators - they can be a useful starting point because you can get an idea of the loan amount and your budget."