Borrowers are failing to review their home loans and could be getting ripped off

ONE in three home-loan customers could be costing themselves thousands of dollars by failing to ensure they are getting a competitive rate, new figures show.

A third of mortgagors have taken no action on their home loan in the last five years, Galaxy research reveals, and experts warn this could be hurting their hip pocket.

Interest rates on both variable- and fixed-rate loans remain around the mid-four per cent range, but Aussie Home Loans executive chairman James Symond said home loan customers are “crazy” if they don’t do an annual review.

“Customers need to give themselves an annual home loan health check, interest rates are at historic lows,’’ he said. “The dealsthat the lenders are doing out there are unprecedented for new customers.”

The Galaxy research was commissioned by iSelect. Its database shows there are many home loan deals available with variable rates starting from 3.98 per cent and fixed-rate loans starting at just 3.99 per cent.

On a $300,000 home loan the average standard variable rate is 4.35 per cent and the monthly repayments are $1493.

For a borrower paying 25 basis points less rate of 4.1 per cent, on the same loan the average three-year fixed rate is 4.19 per cent and the monthly repayments are $1465.

Potential interest which could be saved over a year on the lower rate is $750. Over ten years, that’s a potential saving of $7500.

The site’s spokeswoman Laura Crowden encouraged mortgage customers to take immediate action to ensure they were getting the best deal possible on their rate.

“It appears many people are just sticking with their current provider simply because they feel it would be too much hassle to change,’’ she said.

“Switching to a lower interest rate could end up saving you tens of thousands or even more over the lifetime of your loan.”

The Reserve Bank of Australia has kept the cash rate on hold at two per cent since May last year and AMP chief economist Shane Oliver this week said he didn’t expect a cash rate hike until 2018.

But just last week lender Bank of Queensland pushed up interest rates on their mortgage products outside of any cash rate move - from today variable loans rates will rise by 12 basis points for owner-occupiers and 25 basis points for investors.

April 14, 2016 /