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Yellow Brick Road’s Mark Bouris has questioned the poor take-up rate of new home loan offers, calling on consumers to consult their mortgage broker in light of new research.
Reflecting on a YBR survey that found 83 per cent of Australians with a home loan have not refinanced in the period of falling rates – and 40 per cent have never refinanced – Mr Bouris said it was “crazy” to not take advantage of a more favourable environment.
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“It’s outrageous to think people are still paying high interest despite the opportunity to pay less,” Mr Bouris said.
“In effect you’re just handing the banks extra money. Many people take the time to drive to the cheaper grocery store just so they don’t pay an extra dollar for milk, yet when it comes to home loans they stick their head in the sand.”
Refinancing your home loan in line with falling rates could result in real monthly households savings for consumers, Mr Bouris said.
“For those who took out a home loan five years ago, the average rate after reductions would be 5.3 per cent,” he said.
“The potential savings on an average $350,000 loan with 25 years remaining could be thousands.
“For example, if you refinanced to a rate of 4.8 per cent, you would save $30,660 in interest over the remaining life of your loan. There are also many lenders offering very competitive rates as low as 4.1 to 4.2 per cent, if you do your research then you may find your savings could be significantly more.”
The most common reasons given for not acting on lower rates were “not believing enough money would be saved” (31 per cent), “thinking the fees and charges would outweigh the benefits (20 per cent) and “perceiving the process as too much of a hassle” (18 per cent).
[Related: Concerned consumers paying off debt faster]
