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ACCC modelling found that borrowers with home loans between three and five years old paid an average of 58 basis points (0.58%) more than the average interest rate on new loans.
According to the Australian Securities and Investments Commission (ASIC), the average interest rate in September was 2.62% p.a.
The ACCC says with a home loan of $250,000, refinancing could save $1,400 in interest in the first year, and over the remaining term, the borrower could save more than $17,000 in interest.
Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
Among a raft of recommendations, the ACCC has recommended lenders be required to 'regularly' prompt borrowers whose loans are older than three years to review their current interest rate.
“A significant number of Australian home loan borrowers have not switched lenders for several years, yet they stand to save so much money by doing so,” ACCC Chair Rod Sims said.
“There are factors standing in the way of home loan borrowers switching lenders, such as a lack of clear and transparent pricing, as well as inconvenience and time costs, but for many borrowers switching will be worth the effort.”
Mr Sims also said Consumer Data Right will make the refinancing process easier.
“We remain concerned about opaque pricing in the home loan market, but are encouraged that some banks are moving to more transparency without direct intervention from the government,” he said.
“We are recommending ongoing monitoring of this market so we can ensure that this trend of improved pricing transparency continues. We may recommend further action if it does not.”
'Sticky' products and refinancing
The $250,000 yardstick the ACCC has used could be a conservative measure - the average loan written, according to lending indicator figures, in October was more than $566,000.
External refinancing was down, in original terms, to about $7.7 billion in October - down from highs of nearly $10 billion in May.
October had an average external refinancing loan size of nearly $474,000.
However, internal refinancing was up in October from September to nearly $4.8 billion, though this is still down from May's highs of nearly $5.3 billion.
October's internal refinancing had an average loan size of nearly $416,000.
After the Reserve Bank's (RBA) cash rate cut to 0.10% in November, many lenders moved to introduce home loans with advertised rates under 2%, yet very few of these were variable.
Instead, many of the latest offers lock-in borrowers for upwards of three years, to packaged home loans that also include credit cards and other products.
The ACCC also proposed a time limit of 10 business days for lenders to complete the discharge authority process.
Mr Sims said lenders at present have no incentive to make the discharge process "quick or straightforward".
“We want it to be as easy as possible for borrowers to switch lenders, as it should be in all markets. Our recommendations are designed to make this process faster, less confusing and less frustrating," he said.
The RBA has also provided a $200 billion 'term funding facility' (TFF), which enables banks to access low-cost funding at 0.10% per year over three years: the same amount of time many lenders are offering their competitive fixed home loans for.
As of August, CommBank, for example, had accessed $31.4 billion in the TFF.