The home loan rate you should be paying
There’s a golden figure for home loan customers, and if you’re paying more than it experts say you’re getting ripped off. HERE’S HOW TO GET THE BEST DEAL
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Every home loan customer in Australia should be paying an interest rate under four per cent — or they are getting ripped off, experts have warned.
Home loan rates are continuing to tumble leaving borrowers with a platter of historically low deals to choose from.
Some lenders are even offering variable rate mortgage deals with a “2” in front, but owner occupiers remain in front of investors with cheaper deals offered to them.
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Financial comparison website Mozo’s analysis of the mortgage market showed the gap between principal and interest loans for owner occupiers and investors is 0.42 percentage points.
The average owner occupier rate is now 3.99 per cent compared to investors at 4.41 per cent.
The site’s spokeswoman Kirsty Lamont said it was up to borrowers to take matters in their own hands and demand a better rate from their bank, otherwise they should switch.
“The new magic home loan number is 3.5 per cent, if you are paying anything above that you are paying way too much,” she said.
“It’s time to get out there and compare some of the lower rates on the market, you can get variable rates now below three per cent so there’s some big savings on offer.”
The big four banks have continued to slash mortgage fixed rates this month.
The Commonwealth Bank, ANZ and Westpac are all offering owner occupier customers paying principal and interest a three-year fixed rate of 3.28 per cent, while NAB is offering customers a slightly higher rate at 3.29 per cent.
Aussie Home Loans’ chief customer officer David Smith said the super-low interest rate environment “placed the power firmly into the borrower’s hands”.
“There’s no question that if your home loan rate starts with a 4 then you could be paying too much,” he said.
“There are plenty of home loans for both owner occupiers and investors with interest rates in the 3 per cent range, and incredibly we’re now seeing rates fall into the high 2’s with more lenders expected to follow suit.”
He urged borrowers to use a broker to help get a better rate and if the banks refuses, “then it’s game on”.
TOP 3 OWNER OCCUPIER PRINCIPAL & INTEREST
1. Reduce Home Loans, low rider, 2.89 per cent, $1247 monthly repayments.
2. Homestar, Star Essentials, 2.99 per cent, $1263 monthly repayments.
3. Well Home Loans, 3.02 per cent, $1268 monthly repayments.
TOP 3 INVESTOR PRINCIPAL & INTEREST
1. Reduce Home Loans, investor rate slasher, 3.49 per cent, $1295 monthly repayments.
2. Freedom Lend, variable home loan, 3.34 per cent, $1320 monthly repayments.
Source: Mozo.com.au.
Originally published as The home loan rate you should be paying
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