For immediate release
Information verified correct on December 11th, 2016
Time for borrowers to take back lost interest!
- Average borrowers paid extra $864 in interest in the past 2.5 years
- All 12 experts in finder.com.au monthly Reserve Bank survey predicted no cash rate change today
- Time for borrowers to refinance and consider fixing their home loan before interest rates rise!
May 6, 2014, Sydney – Borrowers are being urged by one of Australia’s biggest comparison websites finder.com.au/home-loans1 to take back their lost interest, following new research revealing average borrowers have paid an extra $864 in interest because lenders haven’t passed on the full rate cuts.
The research follows the finder.com.au Monthly Reserve Bank Survey of Australia’s leading economists and money experts, who all predicted correctly that today’s cash rate decision would remain unchanged at 2.50 percent.
The survey found that almost half of those surveyed (five out of 12) are betting on a rate rise by the end of this year, while a further three expect the next rate change will be in 2015 (see table at the end for a list of experts surveyed and their decisions).
Michelle Hutchison, Money Expert at finder.com.au, said that most borrowers have been paying too much on their home loan since interest rates began to fall in November 2011.
“While the Reserve Bank has dropped the cash rate by 2.25 percentage points since November 2011, lenders have kept on average 0.24 percentage points over that time by not always passing on the full cuts to their customers.
“That’s worth $864 in extra charges that borrowers with an average $300,000 mortgage have paid over that time.
“With interest rate hikes likely to be around the corner, it’s time borrowers took back this lost interest by refinancing their home loan.”
According to finder.com.au/home-loans, borrowers could save by locking in a fixed rate home loan, with the average three-year fixed rate lower than the average variable rate.
"Three-year fixed rates are still lower on average than variable rate home loans, so if you're worried about interest rates rising in the next few years it might be time to consider locking in a fixed rate.
"For instance, the average three-year fixed rate is 5.11 percent while the average variable rate is 5.39 percent. Even if variable rates remained unchanged for the next three years, borrowers with a $300,000 mortgage could still save almost $2,000 over three years by locking in the average three-year fixed rate compared to the average variable rate.
“If variable rates increased by 1.00 percentage point over the next three years (increasing by 0.25 percentage points every six months), borrowers with a $300,000 loan could be $5,880 better off by fixing.
“Don’t let your lender determine the cost of your home loan. It’s time to make a stand and make your lender work harder by comparing home loans online, asking for a discount or switching to a cheaper deal.”
What the finder.com.au survey of leading banking economist had to say...
|Expert, financial institution||Comment about this month's RBA decision|
|Shane Oliver, AMP||"...I think it's really a case of staying on course for interest rates at the moment, and look for more positive signs of the connective economy before tightening..."|
|Ivan Calhoun, ANZ||"...Rumoured temporary deficit reduction levy would risk rate rise being even later as [it] would impact consumer and business confidence and spending."|
|John Symond, Aussie||"...It is highly likely that rates will remain at their historic lows for some time, which is great news for borrowers!"|
|Steven Pambris, Bank of Sydney||"...We believe that any move to interest rates by the RBA is more likely to be upwards, however this will not occur till the effects of the fiscal measures which are to be released in the May Budget are assessed, most likely an increase of 25 basis points around March 2015..."|
|Michael Blythe, Commonwealth Bank||"...With a low inflation number last week they are certainly able to keep sitting on their hats for the time being."|
|Paul Bloxham, HSBC||"...There are also some signs that the labour market is starting to improve, so I think they will be quite comfortable and they will sit still."|
|Michael Witts, ING Direct||"The RBA will sit tight until the full details of the budget are known..."|
|Alan Oster, NAB||"They're [Reserve Bank board] just still waiting to see what's happening..."|
|Jonathan Chancellor, Property Observer||"...The harshness of the forthcoming Federal Government May budget ought to be another indirect dampening trigger of any residual residential price exuberance..."|
|Nathan McMullen, RAMS||"...Labour demand remains weak and is likely to do so for a period of time hence any increases more likely in late 2015."|
|Lisa Montgomery, RESI||"...Present data indicates that rates are not likely to rise in this calendar year..."|
|Hans Kunnen, St George Bank||"Things are not deteriorating, they're not exactly zooming; rates are at historical lows and are slowly having an impact..."|
Source: finder.com.au, ranked alphabetically by financial institution, for more details including full comments click here: https://www.finder.com.au/rba-cash-rate
1.finder.com.au is top 3 financial comparison websites based on Experian Hitwise, 2014
For further information
The information in this release is accurate as of the date published, but rates, fees and other product features may have changed. Please see updated product information on finder.com.au's review pages for the current correct values.
finder.com.au is one of Australia’s biggest comparison websites and has helped over 4.8 million Australians find better credit cards, home loans, life insurance, shopping deals and more since 2006. finder.com.au compares 250 credit and debit cards from 31 providers, over 300 home loan products, and information from 13 life insurance providers as well as online shopping promo codes, mobile phone plans, travel insurance and more. One Australian every five minutes is using finder.com.au or creditcardfinder.com.au to find better (Source: Google Analytics).