Simple way home loan customers can save a fortune
Many mortgage customers are missing out on big savings by simply not picking up the phone and asking for a discount.
Interest rates are continuing to tumble on both fixed and variable rate offers - some are below two per cent - but banks say a only minority of customers are bothering to take action.
Multiple banks, including some of the nation's largest, recorded as few as one in 10 customers phoned them up in recent months to ask for a cheaper rate, leaving them stuck on inflated deals.
While another major lender said only one in four contacted them to seek a cheaper deal.
If a borrower on a $300,000 30-year loan paying a rate of 3.5 per cent received a rate drop to 2.5 per cent they could save over $58,200 in interest charges over the life of the loan.
Aussie chief executive officer James Symond urged Australians to be "proactive" to save themselves some serious cash.
"Bank and lenders will only react with the threat of losing your business," he said.
"An owner occupied paying principal and interest should have a two in front of it.
"An investment loan should have no more than a three in front of it."
Mr Symond said the competition in the mortgage market "remains ferocious".
Latest data showed only one in 10 cash-strapped Australians who took out a mortgage holiday with the nation's big four banks during the pandemic have exited the program.
The RBA has kept the cash rate on hold at 0.25 per cent since March but lenders are continuing to drop their rates, while many are also wheeling out cashback offers to entice in new business.
The RBA governor Philip Lowe has also not ruled out the cash rate falling further - even into negative rates as the economy fights to recover from the hits of the pandemic.
"In a world that is so uncertain and fluid I don't think it is prudent to rule it out," he said earlier this month.
Home Loan Experts' spokesman Alan Hemmings said it only takes a few minutes to do some online research of the best deals available and ask your bank to do better.
"It really is as simple as just picking up the phone, a few minutes with your lender could save you thousands of dollars in interest," he said.
"When having the interest rate conversation with your lender the first thing customers must be prepared to do is move."
GETTING A BETTER DEAL
1. Check your interest rate.
2. Do your research, use financial comparison websites.
3. Contact your lender and ask to speak to the home loan retention team.
4. If they won't budge tell them you are going elsewhere.
5. Contact your lender or mortgage broker and get them to shift you across to a new lender.
Originally published as Simple way home loan customers can save a fortune