Switch to save on your home loan

Refinancing could cut years of your mortgage and save you thousands.

The Home loan price inquiry report from the Australian Competition and Consumer Commission (ACCC) has found Australians with older home loans continue to pay significantly higher interest rates than borrowers with newer home loans.

ACCC Chair Rod Sims said many borrowers could save money by seeking a lower rate from their existing lender or switching to a new lender.

“A significant number of Australian home loan borrowers have not switched lenders for several years, yet they stand to save so much money by doing so,” Mr Sims said.

“There are factors standing in the way of home loan borrowers switching lenders, such as a lack of clear and transparent pricing, as well as inconvenience and time costs, but for many borrowers switching will be worth the effort.”

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The ACCC report found that, as at September 2020, borrowers with home loans between three and five years old paid on average about 58 basis points more than the average interest rate paid for new loans. 

The report revealed borrower with a home loan of $250,000 could save more than $1400 in interest in the first year by switching to a loan with the lower average interest rate paid for new loans. Over the remaining term of the loan that borrower could save more than $17,000 in interest.

Borrowers with loans more than 10 years old were, on average, paying about 104 basis points more than the average interest rate paid for new loans.

“If you are someone with an older loan, you might be surprised to know that borrowers with new loans are likely walking into the very same lender you have your loan with and getting significantly lower interest rates,” Mr Sims said.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.