Some borrowers are paying interest rates of more than 6%, costing them tens of thousands of dollars extra every year – despite an official cash rate which is now below 1% following the RBA decision this week.
Mortgage brokers claim borrowers are unwittingly being left off banks’ standard variable rates without realising. In worst-case scenarios, these rates could be more than double the cheapest rates available.
Canstar figures found that, for borrowers paying rates as high as 6.3%, if they switched to the lowest rate of 2.89% five years into a 30-year loan, they would save $163,000 over the remaining term.
Mortgage brokers say they regularly see customers with interest rates starting with a “6” seeking out cheaper deals. They recommend that borrowers should check their home loan rates annually.
Analysis by financial comparison website RateCity found 15 lenders including Westpac, Citi, HSBC, Suncorp and ME, reduced owner-occupier home loan rates in the past month for new customers, but not for existing borrowers.
RateCity’s spokeswoman Sally Tindall says there are constant interest rate movements and customers must pay attention.