Home loan customers do not know what interest rate they pay

A MAJORITY of home loan customers have no idea what interest rate they are paying which could see them wasting thousands of dollars a year.

EXCLUSIVE

A MAJORITY of home loan customers have no idea what interest rate they are paying which could result in them wasting thousands of dollars a year.

Alarming new figures released by mortgage online bidding service Loan Dolphin found 65 per cent of borrowers are left in the dark when it comes to knowing the interest rate they are being charged.

The Reserve Bank of Australiakept the cash rate on hold at 1.5 per cent this week but despite record-low rates many borrowers are failing to hunt down better deals.

Homeloanexperts.com.au’s managing director Otto Dargan said the recent cash rate drops — the last in August — have left many people unsure of their mortgage rate.

“The problem is that lenders don’t send out a letter every time your rate changes, often you just see it as one line in your next statement,’’ he said.

“And some lenders don’t mention your current rate on your statement so people don’t think about it.”

Financial comparison website RateCity’s database shows on a typical $300,000 30-year home loan the average standard variable rate is 4.7 per cent and the monthly repayments are $1556.

The lowest variable rate deal is offered by Reduce Home Loans at 3.35 per cent and switching to a deal this low would save the borrowers $224 per month or more than nearly $2700 per year.

For a three-year fixed the lowest deal on RateCity’s database is offered by Bank of Queensland at 3.59 per cent.

Loan Dolphin’s chief executive officer Ranin Mendis said he was “shocked” so many borrowers had no idea about their interest rate.

“People notice if their coffee goes up from $3.50 to $4 but if your mortgage rate goes down or it goes up people often don’t realise it,’’ he said.

“That’s a problem if you have a mortgage, every dollar really matters.

“Login into your online banking or look at your statement and see what your rate is and that’s a good place to start.”

Mr Mendis said owner occupiers with a typical $300,000 30-year home loan should be paying less than four per cent and investors should be paying around 4.1 per cent depending on whether they making interest-only repayments or principal and interest repayments.

Originally published as Home loan customers do not know what interest rate they pay