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Australians Burying Their Heads In The Sand When It Comes To Mortgage Rates

Post by Sharat on May 28, 2018 · Under loans · Comments Off on Australians Burying Their Heads In The Sand When It Comes To Mortgage Rates 

Despite the central bank holding the official cash rate steady at 1.50% for the last 19 consecutive months Aussie borrowers are being hit with higher interest rates on their mortgages. Whilst existing borrowers are suffering from rising interest rates, people looking to finance a new home have seen some great offers. What that means is that if you are a loyal banking customer, you are probably missing out on lower interest rates because you have chosen not to switch your lender.

Shock rate rises hitting Aussie borrowers

Surveys suggest that 47 per cent of Australian borrowers have seen their interest rates hiked out of cycle since August 2016 when the RBA last tinkered with the official cash rate. Borrowers that have been hit with rate hikes by the big four banks are equivalent in number to those who borrowed from the smaller banks. This is because most banks in Australia tend to follow the lead set by the big four banks when it comes to interest rates, either because they want to stay in synch or they themselves are also financed by the big boys.

Look for a better deal

70 per cent of mortgage borrowers who banked with the big four said they were unhappy with their interest rate yet only 17 per cent said they had considered switch lenders which means Australians are basically burying their heads in the sand instead of seeking out a better deal. For many years 4.00% was considered the benchmark interest rate for a home loan so if you were able to borrow at a rate below that, it was considered a good deal.

Switch lenders

Now the benchmark has fallen to 3.70 and there are plenty of lenders out there willing to make loans at that rate which means borrowers have lots of options to refinance at super low rates. Banks tend to reserve their best rates for new customers as a way to attracting them. This means existing customers are being given the cold shoulder. This means you should start pushing your bank for a lower interest rate and threaten to switch if they refuse. In the event they fail to comply with your request, put your money where your mouth is and pack up and leave!

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