Three in four Australian mortgage customers do not know their interest rate

Despite rates falling to record lows, a majority of Aussie borrowers are clueless about how much interest they’re paying. And it could be costing them a fortune.

Exclusive: Three in four Australian borrowers do not know their mortgage interest rate and could be dudding themselves of tens of thousands of dollars.

Despite interest rates falling to record lows and many deals even have a “2” in front, home loan customers are clueless about what they are paying.

Independent research commissioned on behalf of lender UBank quizzed more than 1000 Australian mortgage customers and found only 25 per cent knew their mortgage rate.

Despite the small portion it has improved over recent years — in 2018 only 14 per cent knew their rate.

UBank’s chief executive officer Lee Hatton says too many people have taken the “set and forget” attitude with their mortgages. Picture: James Croucher

For a borrower with a $300,000 30-year loan paying the average variable rate of 3.95 per cent, if they switched to the lowest variable rate of 2.89 per cent they could save themselves nearly $64,000 over their loan term.

Financial comparison website RateCity’s spokeswoman Sally Tindall said it was a “worry” so many borrowers were flying blind about their rate.

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“It’s so important you know your rate because you can compare it to what’s available to new customers with your existing lender or you can compare it to other lenders,” she said.

“If you are an owner occupier and have been paying down your debt for a few years you could be looking at rates below 3.5 per cent.”

Interest rates remain at record lows in Australia with some deals under three per cent.

The Reserve Bank of Australia board meets again today (Tues) and despite their being speculation of a third consecutive rate drop it’s likely the cash rate will stay on hold at 1 per cent.

Governor Philip Lowe slashed the cash rate twice in June and July by 0.50 percentage points in total.

UBank’s chief executive officer Lee Hatton said only 25 per cent of people knowing their rate was not enough and more attention needed to be taken.

“People have taken the attitude of set and forget with their mortgage,” she said.

“Anything with a four in front is too much right now especially with the last two rate cuts and if you are paying over 3.5 per cent you really should be asking yourself some questions.”

Tribeca Financial’s chief executive officer Ryan Watson said “banks rely on home loan apathy from their customers”.

“This means after 12 to 24 months of taking out a home loan they start jacking up their interest rates and the consumer ends up paying thousands of dollars in excess interest over the life of the loan,” he said.

@sophieelsworth

LOWEST OWNER OCCUPIER VARIABLE RATES

1. Reduce Home Loans, Low rider variable, 2.89 per cent.

2. Mortgage House, Blue home prime, 2.89 per cent.

3. Well Home Loans, Well variable, 2.97 per cent.

Source: Ratecity.com.au.

LOWEST OWNER OCCUPIER THREE-YEAR FIXED RATES

1. Pacific Mortgage Group, Fixed home loan, 2.94 per cent.

2. Mortgage House, Advantage home loan three-year fixed, 2.96 per cent.

3. Reduce Home Loans, Home owners dream, 2.97 per cent.

Source: Ratecity.com.au.