Interest rates have been rising since May last year and, with inflation still too high, more hikes are on the horizon. But Aussies could be saving thousands of dollars on their home loan by switching banks.
Based on refinancing enquiries to Compare Club, homeowners in Australia on a 6.45 per cent variable rate with one of the Big Four banks could be saving an average of $404 a month in mortgage repayments if they were moved to their lender’s best rate.
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In addition, ANZ, Commonwealth Bank, NAB and Westpac are all offering new customers cashback deals of around $4,000. These aren’t available to existing customers or homeowners with less than $250,000 left on their loan, meaning loyal customers are potentially missing out on getting around $2,404 back into their bank balance.
Eligible homeowners with a $600,000 25-year principal-and-interest no-fee mortgage on a variable rate of 6.45 per cent could save $476 a month and get $3,000 cashback by moving to Westpac’s lowest variable rate of 5.14 per cent.
Meanwhile, moving to ANZ could net them a $406 monthly saving and $4,000 cashback.
“Our first piece of advice to homeowners is always to speak to your lenders and see if they can lower your interest rate, but this data really shows the cost to Australian households who don’t shop around,” Compare Club CEO Lance Goodman said.
“Our brokers are also finding that, for existing mortgage holders, lenders will rarely match the best rate that they’re advertising to new customers unless the homeowner says they’re switching banks. It means that mortgage holders have to often go through long negotiations just to be treated the same as a new customer.”
Compare Club data found that if a customer managed to secure a loan with the best possible variable rate with any of the Big Four banks in May 2022 - when the RBA first started raising rates - they would still be out of pocket by an average of $168 per month.
“Existing customers who prudently refinanced their loans before the cash rate got too high can feel particularly hard done by. They may still be able to negotiate down to their lender’s lowest rate, but they’re not eligible for cashback offers, even though they’ve been responsible with their finances,” Goodman said.