Josh Freedenberg (treasurer) ordered to inquire into the pricing schemes of home loans in Australia. This responsibility was given to the Australian Competition and Consumer Commission (ACCC). Now the ACCC has released its report on this matter. As per that report, the ACCC urges all the homeowners in Australia to review their home loan rates.
The report says that there is a vast difference between the ones who have new home loan schemes compared to those who have slightly older home loans. Those who haven’t refinanced their home loans in a while are paying thousands of dollars of extra interest.
Many people switch lenders instead of loans, and this is not a good thing. Why take the burden to switch lenders when you can easily switch loans and save thousands of dollars?
Take a look at the difference in the interest rates:
As per the latest regulations of ACCC, the average interest rate is 2.62% right now. Taking a look at the data of previous years, you will understand the importance of renewing your home loan:
- The loans that are less than a year old – 2.91%
- That is 1-3 years old – 3.09%
- 3-5 years old – 3.20%
- 5-10 years old – 3.33%
- More than 10 years old – 3.66%
The difference mentioned above may not seem significant enough. But if you calculate the impact of this difference over a long period, there is a vast difference.
The latest trend about refinancing home loans
As per the latest report, about $15 billion of home loans have been refinanced in May only. The number of people refinancing home loan schemes is increasing significantly.
Some other reports suggest only 6% of total mortgage holders have refinanced in the last 12 months before June 2020. There are some suggestions from ACCC regarding those who find it difficult to switch their loans. Take a look at this list:
- The lenders should provide borrowers with the latest information about the best interest rates in the market. This way, they can encourage people to switch to a better option.
- Reduce the time taken in the discharge process. Most of the borrowers find it hard to switch because the discharge process takes too long.
- Monitoring should be done regularly to check whether the rate in the market.
All such information will help the existing borrowers get the best home loan interest available in the market.