Switch lenders if rate no good

OWNER occupier mortgage customers should be paying an interest rate less than 3.2 per cent or look to switch banks, experts say.

Borrowers have lapped up three Reserve Bank of Australia cash rate cuts so far this year and lenders are continuing to drop their rates.

Analysis from financial comparison website RateCity found there are 71 lenders offering three-year fixed rate deals under 3.2 per cent and 64 lenders with variable rate deals under this mark.

Experts are predicting another cash rate cut in the new year but are urging owner occupier borrowers paying principal and interest to take action now to save themselves cash.

Mortgage Choice broker Marvin Coleman said he had many clients seeking help with their loans that were left stuck on exorbitant rates.

“I’m seeing some owner occupiers with rates anywhere from 4.8 through to even low 5s because they have not reviewed their lending arrangements,” he said.

RateCity’s spokeswoman Sally Tindall said all owner occupiers should be chasing deals under 3.2 per cent.

“If you are an owner occupier who has been paying down their debt for some time there’s no reason why you shouldn’t look for rates under 3.2 per cent or even under three per cent,” she said.

Investment manager Liam Keegan and his wife Emily, both 33, who works as a teacher, recently refinanced from ANZ to Macquarie after he was frustrated his bank was dragging its heels at passing on rate cuts.

The couple have a $645,000 mortgage on their three-bedroom home in Melbourne’s southeast and refinanced from 3.42 per cent to 3.09 per cent.

“I pay about $800 per week and I have kept the repayments at the same level so I can pay it off,” Mr Keegan said.

“I felt like the major banks were very slow at passing on rates and I find with my new bank they are more technologically savvy.”

RateCity’s database found the lowest variable rate home loan was offered by smaller lender Reduce Home Loans at just 2.69 per cent.

The cheapest three-year fixed loan was offered by UBank at just 2.69 per cent.

For a borrower with a $300,000 30-year loan paying principal and interest their monthly repayments would be $1215 and they would pay $137,000 in interest over the term.

Mr Coleman said that it wasn’t uncommon for borrowers to not know their interest rate when seeking help and many “did not even know where to find it on their banking app”.