Cheap fixed rate mort­gages could bite back

Port Douglas & Mossman Gazette - - REAL ESTATE -

HOME buy­ers are snap­ping up heav­ily dis­counted fixed-rate mort­gages at a record level, but there could be an ex­pen­sive sting in the tail for many bor­row­ers.

Dubbed the ‘‘re­vert rort’’, many fixed home-loan rates jump by up to 2 per­cent­age points as soon as the fixed pe­riod is over, with many bor­row­ers au­to­mat­i­cally switched over to some of the most ex­pen­sive loans on of­fer.

Ac­cord­ing to fi­nan­cial com­par­i­son com­pany Mozo, switch­ing back into the most ex­pen­sive vari­able rate loan can add an ex­tra $100,000 to to­tal re­pay­ments.

With the cur­rent crop of fixed rates at 4.99 per cent, the num­ber of bor­row­ers lock­ing in mort­gages has tripled since De­cem­ber, Mozo di­rec­tor Kirsty La­mont said.

‘‘What most bor­row­ers don’t re­alise is that most lenders don’t roll you on to their most com­pet­i­tive vari­able rate,’’ Ms La­mont said.

‘‘Lenders are count­ing on bor­row­ers to be lazy.’’

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