Australian homeowners could now save around $40,000 over the course of their mortgages under new credit reporting laws introduced by the federal government.
The laws, which were first introduced in 2014, have finally been adopted by the big banks, with Commonwealth Bank implementing the changes on Tuesday and the ANZ and Westpac making moves over the weekend.
On a 25-year home loan, these savings work out to around $112 per month, REA Group reported, citing creditsimple.com.au.
The new Comprehensive Credit Reporting laws mean banks can see the positive records of homeowners for the first time, rather than just negative credit scores.
“Good qualities like paying their credit card or car loan on time were never included,” Credit Simple’s CEO David Scognamiglio said. “This gave an unclear picture on what they could actually afford to borrow.”
The new credit reporting standards will see positive records held by the credit bureau instead of just the banks, and they can shared with other lenders.
Scognamiglio said the change could see “up to 90 per cent of homeowners to qualify for better mortgage deals.”
The CEO said the average mortgage holder could even qualify for around 0.5 per cent off their current mortgage rate, which works out to a saving of $40,000 over 25 years for the average $372,902 home loan.
Good credit scores are still important
“It is more important than ever to make sure you pay your loans on time — missed payments will make your score go down,” Scognamiglio said.
“A good score means you are a valuable commodity to a bank...banks will see you are a great payer even if your history is with another bank. That’s a game changer, and will breed new competition into the market, which means rates will get better.”
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