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.
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| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | LVR | Lump Sum Repayment | Additional Repayments | Split Loan Option | Tags | Features | Link | Compare |
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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
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