A concerning new report from Mozo highlighted that two in five Australians (41%) with a mortgage don’t know their home loan interest rate – a figure unchanged from earlier this year.
Despite the rising cost of living and significant rate hikes, many borrowers remain unaware of how much they’re paying, potentially costing them thousands in unnecessary interest.
Mozo’s analysis found that the average variable rate offered by big four banks sits at 7.15%, while non-big four lenders provide lower rates averaging 6.71% for loans with 80% loan-to-value ratios.
Switching to a lower rate could yield significant savings. For instance, borrowers with a $500,000 loan could save $140 per month, or $62,684 over 25 years, by refinancing to a more competitive rate.
Mozo’s report revealed a clear trend: borrowers who compare home loan rates annually secure better deals. Those who regularly shop around pay an average interest rate of 5.78%, compared to 6.46% for those who “rarely” or “never” compare.
This seemingly small difference results in substantial long-term savings. For a $500,000 loan, switching from a 6.46% to a 5.78% rate reduces repayments by $209 per month, translating to tens of thousands saved over the loan’s life.
Mozo’s survey also sheds light on financial struggles facing homeowners.
Nearly half of respondents (48%) admitted to feeling out of control with their expenses, while 14% doubted their ability to meet mortgage repayments in the next 12 months. Alarmingly, 28% have already borrowed money from family or friends to manage repayments.
Peter Marshall (pictured above), Mozo’s banking expert, urged borrowers to prioritise financial awareness.
“Understanding financial products and what your priorities are is very important as you could end up paying for services and features that you don’t need... Paying even a little more than we need to can add up to a significant extra cost over many years,” Marshall said.
For homeowners overwhelmed by rising rates, refinancing or negotiating with their lender could offer much-needed relief. Marshall emphasised that banks often accommodate customers willing to challenge their rates.
“The big four banks will often be prepared to negotiate their rates to win or retain customers,” he said. “The sooner you have a chat with your bank about an upcoming issue, the sooner you can start getting help.”
Mozo’s research underscored that borrowers who know their interest rates and compare loans regularly save more over time.
In contrast, failing to monitor rates puts financial control at risk, leaving mortgage holders vulnerable to unnecessary expenses.
For those feeling uncertain, starting with a basic budget and reviewing home loan options could be the first steps to regaining financial stability.
For more information, visit the Mozo website.
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