Bor­row­ers fi­nally tak­ing an in­ter­est in rates

Townsville Bulletin - - NEWS - AN­THONY KEANE

BOR­ROW­ERS are build­ing bet­ter knowl­edge of their mort­gages as a string of in­ter­est rate changes by banks and other lenders fo­cuses their thoughts on how much they pay, a re­cent study has found.

The new Loan Dol­phin re­search has found that two out of three bor­row­ers know what in­ter­est rate they are pay­ing, which is a big im­prove­ment on last year when only one in three knew their rate.

The study found that the big­gest im­provers in home loan aware­ness were 25- to- 34 year olds, with 70 per cent now know­ing their mort­gage rate, up from 30 per cent in 2016.

LoanDol­phin co- founder and CEO Ranin Mendis said the re­search showed a “mas­sive im­prove­ment ” in bor­row­ers’ knowl­edge and it most likely stemmed from the rush of re­cent in­ter­est rate moves, par­tic­u­larly the changes in in­ter­est- only and in­vest­ment loans. “If they are pay­ing in­ter­est only they would be quite wor­ried and they are start­ing to look around,” he said. “Some­times con­sumers have this ‘ set and for­get’ men­tal­ity – they feel what they are cur­rently given by their bank or bro­ker is prob­a­bly a good rate, and don’t want to go through the has­sle of com­par­ing and shop­ping around.”

Mr Mendis said good bor­row­ers should de­mand bet­ter deals. “Don’t set­tle for what was given to you,” he said.

“We have seen an in­crease in com­pe­ti­tion among banks for owner oc­cu­pier loans with a loan to value ra­tio of 80 per cent or less and ( cus­tomers) who are will­ing to re­pay with prin­ci­pal and in­ter­est.”

Mort­gage and con­sumer fi­nance spe­cial­ist Lisa Mont­gomery said sharp rises in in­ter­est rates for in­vestors and in­ter­est only bor­row­ers had cer­tainly caught their at­ten­tion in re­cent months.

“That’s why we are see­ing this spike in aware­ness, ( by bor­row­ers) rather than owner oc­cu­piers,” she said.

“How­ever, it’s the owne­roc­cu­piers who should be tak­ing no­tice be­cause there has been so many out- of- cy­cle rate changes, par­tic­u­larly by the big four banks, in the past 12 months.”

This meant that it was very likely that some­one who had not checked their mort­gage rate for a few years was now in a non- com­pet­i­tive loan, Ms Mont­gomery said.

Fall­ing Re­serve Bank in­ter­est rates since 2011 had lulled bor­row­ers into a false sense of se­cu­rity, she said.

“And lenders don’t nec­es­sar­ily tell us what the in­ter­est rate is.

“They are telling us what the new re­pay­ment is, so they are not nec­es­sar­ily giv­ing us all the in­for­ma­tion, just what they have to give us.”

Ms Mont­gomery said bor­row­ers should com­pare their rate with oth­ers on­line, and de­mand their cur­rent provider at least match its best of­fer for its new cus­tomers.

“All lenders have re­ten­tion teams in place and they are ex­pect­ing your phone call. Some­times it can just take a 10 minute phone call to your lender to get your­self a per­cent­age off that loan,” she said.

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