Home loan customers let banks rip them off with high interest rates
Interest rates might be at record lows, but many Aussies are still paying far too much on their home loan. Here’s what you can do to get a better deal.
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Exclusive: Just one in 150 home loan customers bother to phone up their bank and demand a better deal, it can be revealed.
Despite dozens of lenders failing to pass on last month’s cash rate cut in full, multiple banking sources have told News Corp how few customers took them to task on why they didn’t receive the full rate cut.
The Reserve Bank of Australia board cut the cash rate to 0.75 per cent last month.
It is not expected to drop further when the RBA board meets on Tuesday.
Mortgage Choice broker James Algar said once borrowers had secured their home loan they “lose interest and the banks take advantage of that”.
He said some customers had come to him seeking help while sitting on loans with exorbitant interest rates around the five per cent mark.
“We’ve seen lots of rate cuts and more often than not the banks have passed on half of those rate cuts to existing borrowers,” Mr Algar said.
“We regularly see borrowers with rates around 4.8, 4.9 and in the five’s on owner occupier principal and interest loans.”
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Mr Algar said in many instances he was able to knock off at least 1 per cent on a borrower’s existing home loan rate.
Data from financial comparison site RateCity shows on variable home loans the cheapest deals start at just 2.74 per cent.
The lowest variable deal by the big banks being offered by Westpac starting at just 3.44 per cent.
The Mortgage and Finance Association of Australia’s chief executive officer Mike Felton said customers weren’t “doing enough” to keep their lenders accountable.
“Invariably people don’t do enough in order to refinance, they look at the amount coming through on the statement and provided they can meet those repayments they are not focused on the interest rate,” he said.
“People need to far more proactively assess the suitability of their home loan and the interest rate and the fees they are paying.”
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The RBA has slashed the cash rate three times in 2019 and more rate cuts could be on the horizon.
The big four banks passed on between 0.55 and 0.59 percentage point drops of the 0.75 per cent cuts this year.
Borrowers seeking out better deals should contact their lender and ask to speak to their mortgage retention team.
If they cannot negotiate a better deal experts say they should then consider refinancing their loan.