54% of Australians don't know their home loan interest rate

author-avatar By on December 09, 2020
54% of Australians don't know their home loan interest rate

More than half of Australians are in the dark about how much they pay in interest or fees on their home loans, personal loans, and credit cards.

That's according to new research commissioned by Australian fintech Finspo, which revealed 73% of Aussies don't think they're getting the best available interest rate from their lender.

That's despite most not knowing what their home loan interest rate is in the first place, and only 21% negotiating with their lender.

Buying a home or looking to refinance? The table below features home loans with some of the lowest variable interest rates on the market for owner occupiers.

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. If products listed have an LVR <80%, they will be clearly identified in the product name along with the specific LVR. The product and rate must be clearly published on the Product Provider’s web site. Monthly repayments were calculated based on the selected products’ advertised rates, applied to a $400,000 loan with a 30-year loan term.

The research, based on a survey of over 1,000 Australians, found that three in ten Australians (30%) don't think the interest and fees they pay on their financial products are substantial enough to worry about, while 28% think financial institutions are all the same. 

What's more, one in five don't bother shopping around for financial products with better rates and lower fees because "it's too hard". 

This is despite the fact that interest rates on home loans are plummeting to their lowest levels in history, and asking for a better rate could literally save thousands in interest repayments every year.

In fact, the difference in interest rates between a new home loan and one taken up over four years ago is around 0.40% per annum according to Finspo research.

On a $400,000 home loan, that equates to a saving of around $1,600 in interest repayments: Finspo CEO Angus Gilfillan said Australians are missing out on thousands each year in savings.

“The first step is knowing what you’re paying, and what this research tells us is that people simply don’t know," Mr Gilfillan said.

“With interest rates at record low levels, now is absolutely the time for Australians to look for a better deal on their home loans."

The research also found that seven in ten Australians (69%) are more aware of how much their utilities bills cost than the interest charged on their loans.

Five in six Australians (83%) have shopped around for a better deal on their mobile phone, electricity, internet or gas to save money.

“We’re quicker to shop around for a cheaper mobile phone plan than we are for a lower home loan rate – even though the potential savings are much greater,” Mr Gilfillan said.

“What’s staggering is the difference between what people think their banking costs, and what it actually costs. Finspo research showed that the average amount spent by Australians on their banking was $9,500, but, when asked about it, people tend to not know or significantly underestimate this number," Mr Gilfillan said.

“Not knowing what their banking costs also means Australians don’t know how much they could save."

The main reasons Australians gave for not knowing how much their banking costs are because interest rates and fees are not shown clearly on their statements: 83% believe financial institutions should be more transparent around the interest and fees they charge.

Finspo launches app to help Aussies save

The findings come as Finspo today launches its new app designed to help Aussies save more by banking better.

The app will give users an overview of the true cost of their banking across products and providers, give personalised insights on where they can save, and point out areas where they can save.

[See also: How regular reminders could save you thousands on your household bills]

“Many Australians have accounts, loans and credit cards with different banks and lenders – which means they don’t have a consolidated view of their banking. Through Finspo, users can link their accounts in one place and get a much clearer picture of their banking, and receive smart insights to help them save,” Mr Gilfillan said.

“Amazingly, more than two thirds of Australians don’t actively manage their funds to reduce fees and interest payments – for example, nearly half of Australians like to have savings, even if it means they don’t pay off all of their credit card debts each month.

“When you consider that credit card interest is around 21% per annum, that’s a lot of money to be paying in interest when you’ve got the available funds in a savings account … especially when savings accounts earn very little interest. Our insights will show people how they can save."

See here for a list of other popular budgeting and savings apps in Australia. 


Photo by Dex Ezekiel on Unsplash

Disclaimers

The entire market was not considered in selecting the above products. Rather, a cut-down portion of the market has been considered which includes retail products from at least the big four banks, the top 10 customer-owned institutions and Australia’s larger non-banks:

  • The big four banks are: ANZ, CBA, NAB and Westpac
  • The top 10 customer-owned Institutions are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management in November 2020. They are (in descending order): Credit Union Australia, Newcastle Permanent, Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
  • The larger non-bank lenders are those who (in 2020) has more than $9 billion in Australian funded loans and advances. These groups are: Resimac, Pepper, Liberty and Firstmac.
  • If you click on a product link and you are referred to a Product or Service Provider’s web page, it is highly likely that a commercial relationship exists between that Product or Service Provider and Savings.com.au

Some providers' products may not be available in all states. To be considered, the product and rate must be clearly published on the product provider's web site.

In the interests of full disclosure, Savings.com.au, Performance Drive and Loans.com.au are part of the Firstmac Group. To read about how Savings.com.au manages potential conflicts of interest, along with how we get paid, please click through onto the web site links.

*Comparison rate is based on a loan of $150,000 over a term of 25 years. Please note the comparison rate only applies to the examples given. Different loan amounts and terms will result in different comparison rates. Costs such as redraw fees and costs savings, such as fee waivers, are not included in the comparison rate but may influence the cost of the loan.

Latest Articles

author-avatar
Emma Duffy joined Savings.com.au as a Finance Journalist in 2019 after spending a year as the editor of The Real Estate Conversation. She's passionate about empowering people to make smart financial decisions and improve the financial literacy of Australians by translating complex finance topics into understandable, relatable content.

Collections:

Get free insights & tips monthly

By subscribing you agree to the Savings Privacy Policy

Loading data please wait...

{{returnData.productName}}

Overview

Current Rate

{{returnData.currentRate | percentage:2}}

Comparison Rate*

{{returnData.comparisonRate | percentage:2}}

Rate Type

{{returnData.rateType}}

Advertised Rate

{{returnData.advertisedInterestRate}}

Comparison Rate*

{{returnData.comparisonRate}}

Monthly Repayment

{{returnData.monthlyRepayment}}

Interest Type

{{returnData.interestType}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Bonus Interest Rate

{{returnData.bonusInterestRate | percentage:2}}

Total Interest Rate

{{returnData.totalInterestRate | percentage:2}}

Introductory Rate

{{returnData.introductoryRate | percentage:2}}

Introductory Term

{{returnData.introductoryTerm}}

Base Interest Rate

{{returnData.baseInterestRate | percentage:2}}

Term

{{returnData.term}}

Advertised Interest Rate

{{returnData.advertisedInterestRate | percentage:2}}

Interest Frequency

{{returnData.interestFrequency}}


Fees and Features

Ongoing Annualised Fee

{{returnData.annualFee}}

Upfront Fee

{{returnData.upfrontFee}}

Offset Account

Redraw

Principal & Interest

Interest Only

N/A{{returnData.interestOnly}}

Max loan to value ratio (LVR)

{{returnData.maxLVR | percentage:0}}

Lump sum repayments

N/A

Additional repayments

Maximum Loan Term

{{returnData.maximumLoanTerm}}

Upfront Fee

${{returnData.upfrontFee}}

Ongoing Monthly Fee

{{returnData.ongoingFees}}

Early Repayment Fee Applies

N/A

Vehicle Types

{{returnData.vehicleType}}

Maximum Vehicle Age

{{returnData.maximumVehicleAge}}

Pre Approval Available

N/A

Online Application

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Account Keeping Fee

{{returnData.accountKeepingFee}}

Minimum Monthly Deposit

{{returnData.minMonthlyDeposit}}

Linked Account Required

N/A

Interest Calculated

{{returnData.interestCalculated}}

Interest Paid

{{returnData.interestPaid}}

Online Application

N/A

ATM

N/A

EFTPOS

N/A

Minimum Deposit

{{returnData.minDeposit | currency : '$' : 0}}

Upfront Fees

{{returnData.upfrontFee | currency : '$' : 0}}

Annual Fees

{{returnData.annualFee | currency : '$' : 0}}

Notice Period to Withdraw

{{returnData.noticePeriodToWithdraw}}

Online Application

N/A

Automatic Rollover

N/A

Maturity Alert

N/A