Demand a better home loan deal, ACCC tells borrowers
The big bank "oligopoly" keeps borrowers from seeking out a better home loan deal, Australia's competition watchdog has claimed.
The Australian Competition and Consumer Commission (ACCC) has slammed Australia's major banks for what it calls "opaque" mortgage pricing. While undertaking a review at the behest of then-Treasurer Scott Morrison, the ACCC said it found "unnecessarily high search costs or effort" reduced borrowers' willingness to shop around for a better home loan deal, and that borrowers were largely unaware they could negotiate a better rate from their lender.
"Borrowers may not be aware they can negotiate with their lender on price, both before and, particularly, after they have established their mortgage," ACCC chair Rod Sims said.
According to the ACCC, an existing borrower with an average-sized home loan could save $850 a year by negotiating with their lender to receive the same rate offered to new borrowers.
"I encourage more people to ask their lender whether they are getting the lowest possible interest rates for their residential mortgage and, as they do so, be ready to threaten to switch to another lender," Sims said.
Sims said in many cases, the threat of switching lenders was necessary to secure a better deal. Sims also pointed to a pricing sample of seven smaller lenders, who he said offered lower rates than the major banks. But the ACCC warned that regulatory changes could stifle smaller lenders' ability to compete.
"Some of the banks in our sample rely heavily on brokers and aggregators to gain market share. The ACCC notes that these banks, and other lenders in a similar position, are likely to be more vulnerable to future regulatory changes that affect the use of brokers as a distribution channel," the ACCC said.
If you think you're paying too much for your home loan, click the link below to learn how to negotiate a better deal from your lender.
If your lender is unwilling to budge on your interest rate, it may be time to refinance. You can use the table below to compare some of the best refinancing deals available through Finder.
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