When I studied journalism, they taught us that a boring story and headline is: “Dog bites man”. However, a real story, the lecturer said, was: “Man bites dog”.Yet, some 80 per cent of Australians pay more in monthly repayments by choosing to keep their mortgage with one of our four leading banks, rather than switching to one of the bank minnows for a better interest-rate deal.
The immediate boost to your bottom line by switching loan providers would be a not so insubstantial $699 a month. Pocket that – let’s face it, an appealing prospect with the cost of living rising so dramatically – and your overall savings from the switch would amount to $124,885. Loan serviceability hurdles are high. The financial regulator now insists that lenders apply three full percentage points on top of the headline borrowing rate, as a “stress test” on the amount you can borrow. For all the media scaremongering about possible home loan defaults after the official rate increase, because of this, recent borrowers may, in fact, be among the most prudent and protected.
The insurance only protects the lender if you default, not you. It is a subject for another story, but it is ludicrous – in a market that needs to be competitive – that this insurance is not portable, so you can’t take it with you when you switch loan providers.The accompanying table supplied by Mozo shows that rate is offered by Well Home Loans. I have highlighted this provider, as they offer the cheapest rate that is backed by an authorised deposit-taking institution .