Home loan customers across Australia should be paying an interest rate under 4% – or they’re paying too much, according to one specialist. Some lenders are even offering variable rate mortgage deals with a “2” in front.

Financial comparison website Mozo’s analysis of the mortgage market showed the gap between principal & interest loans for owner occupiers and investors is 0.42 percentage points. The average owner-occupier rate is now 3.99% compared to 4.41% for investors.

The site’s spokeswoman Kirsty Lamont says borrowers need to be proactive and demand a better rate from their bank, otherwise, they should switch.

“The new magic home loan number is 3.5%, if you are paying anything above that you are paying way too much,” she says. “It’s time to compare some of the lower rates on the market. You can get variable rates now below 3% so there’s some big savings on offer.” The major banks continue to reduce mortgage fixed rates. The Commonwealth Bank, ANZ and Westpac are all offering owner-occupiers paying p & i a three-year fixed rate of 3.28%, while NAB is offering 3.29%.