RATE CRASH: The worst home loan deals stinging customers
MORTGAGE customers are paying interest rates higher than 6 per cent on their loans, leaving them wasting hundreds of dollars every month.
Alarming new findings from online home loan platform Lendi show some customers who refinanced have been paying exorbitant rates.
The Reserve Bank of Australia has cut its official cash rate twice in the past two months, pushing it down to a record low of 1 per cent. This has resulted in lenders also dropping their rates, bringing some loan offers below the 3 per cent mark.
However, Lendi found:
• A borrower with a $430,000 mortgage with Liberty Finance was paying 6.35 per cent, refinanced to Westpac and now pays a rate of 3.79 per cent, saving $630 per month.
• A borrower with a $328,000 loan with RAMS was paying 5.42 per cent refinanced to a loan with Macquarie, and now pays 3.65 per cent. This saves them $345 per month.
• A borrower with a $299,000 loan switched from St George with a rate of 4.66 per cent to ING and now pays a rate of 3.18 per cent, saving $253 per month.
Lendi co-founder David Hyman said often customers got stuck on old rates and if they failed to pay attention they would ultimately be left paying too much.
"When they initially took out the loan there may be some level of risk when the lender took on the customer," he said.
"But over four or five years, if they've paid their loan on time, whatever that issue was at the time doesn't matter now, but the lender isn't going to go typically out of their way to move a customer to the new rate that they qualify for."
Mr Hyman said owner occupiers with a typical loan of $300,000 who are paying principal and interest they should be hunting for a rate around 3.3 per cent.
Consumer finance expert Lisa Montgomery urged all borrowers to "check their rates on their home loans and investment loans".
"It's really likely that you are paying too much," she said.
"Regardless of whether you are an owner occupier or investor, have a look at financial comparison websites.
"When you are calling your lender you are going to be talking to their retention teams, and you need to be armed with information."
Mr Hyman said lenders sometimes offered cashback offers to new customers for switching to them.
He said this could help subsidise any switching costs.
Lendi also found the median interest rate for the big four banks was 3.79 per cent compared with 3.57 per cent for other lenders.