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

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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.

Lender

Variable
More details
UNLIMITED REDRAWSSPECIAL OFFER
  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
UNLIMITED REDRAWSSPECIAL OFFER

Smart Booster Home Loan Discounted Variable - 2yr (LVR < 80%)

  • Fast turnaround times, can meet 30-day settlement
  • For purchase and refinance, min 20% deposit
  • No ongoing or monthly fees, add offset for 0.10%
Variable
More details
AN EASY DIGITAL APPLICATION
  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
AN EASY DIGITAL APPLICATION

Neat Variable Home Loan (Principal and Interest) (LVR < 60%)

  • No ongoing fees - None!
  • Unlimited additional repayments
  • Easy online application, find out if you're approved quick!
  • Redraw- Access your additional payments if you need them
  • Use the app to get loan insights to help you pay off your home loan faster
Variable
More details
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
100% FULL OFFSET ACCOUNTNO APPLICATION FEE OR ONGOING FEES

Low Rate Home Loan - Prime (Principal and Interest) (Owner Occupied) (LVR < 60%)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
Variable
More details
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.
  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services
NSW/VIC/SA METRO & INNER REGIONAL AREAS$5000 CASHBACK. T&Cs APPLY.

Variable Home Loan (Principal and Interest)

  • No upfront or ongoing fees
  • 100% full offset account
  • Extra repayments + redraw services

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%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. All products will list the LVR with the product and rate which are clearly published on the Product Provider’s web site. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of May 24, 2022. View disclaimer.

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. 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. Savings.com.au, yourmortgage.com.au, yourinvestmentpropertymag.com.au, and Performance Drive are part of the Savings Media group. In the interests of full disclosure, the Savings Media Group are associated with the Firstmac Group. To read about how Savings Media Group manages potential conflicts of interest, along with how we get paid, please visit the web site links at the bottom of this page.

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author-avatar
Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

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