Home loan customers told they must shop around and demand better deals by the consumer cop

Borrowers must take matters into their own hands and demand a better deal from their bank, the nation’s consumer cop has warned.

Do yourself a favour and pick up the phone to your bank.

Don’t wait to do this. Do it now.

The nation’s consumer watchdog, the Australian Competition and Consumer Commission, this month said in its Home Loan Price Inquiry report it’s up to consumers to shop around when hunting for a competitive mortgage deal and to negotiate with lenders.

Yep, it’s up to you.

Your bank is not going to give you a pat on the back and shake your hand for being a good customer. They are going to punish you for being loyal, charging you rates higher than new customers who sign up with them.

Do a quick search online to see what deals are available – the lowest owner-occupier variable rates are just 2.39 per cent, while three-year fixed rate deals are 2.09 per cent.

Then ring your bank and request to speak with the home loan retention team. Tell them it’s because you want to switch lenders to get a better deal.

The ACCC’s report says: “we encourage consumers to shop around when looking for a home loan and to negotiate with lenders”.

“Even a small reduction in interest rates can potentially save a consumer thousands of dollars over the life of their loan,” it says.

Home loan customers need to take matters into their own hands a demand a better deal.

But let’s not forget this – hundreds of thousands of mortgage customers have signed up to take a mortgage holiday in the past two months, which means they don’t have to make repayments for up to six months due to COVID-19.

There’s a lot of people hurting out there and they are hurting real bad.

But there’s also a lot of borrowers who are still in work and are trying to get ahead of their home loan while interest rates are so ridiculously low.

The ACCC report says those who ask for a better deal are often left paying less.

“Consumers willing to ask for a better rate can often obtain an additional discount to that advertised by lenders; these additional discounts are known as discretionary discounts,” it says.

So don’t stuff around, ask your bank to cut your home loan interest rate.

If you get wobbly knees at the thought of this, engage a trusted mortgage broker to do the dirty work for you to get you a better deal.

Comparing rates can be confusing: the report found the standard variable rate (SVR) – the headline rate used to compare loans – was an inaccurate price indicator to help customers compare apples with apples.

So what you really need to know from your bank isn’t what the “discount” is on your loan. It’s the actual rate you are paying.

If you’re lucky enough to still have a stable income, there’s no better time than now to try and smash down your loan and become free of your banker’s grip once and for all. [e-mail]

@sophieelsworth

Originally published as Home loan customers told they must shop around and demand better deals by the consumer cop