Buckle up: interest charges have risen faster over the past year than any other corresponding period since 2011. That’s despite the Reserve Bank keeping rates on hold for the last 16 months.
Australian Bureau of Statistics cost of living data shows that interest charges on mortgages for employed Australians rose 4.5% from December 2016 to December 2017 – all while the official RBA cash rate has remained frozen at 1.5%.
The figures come just days after the Productivity Commission released a report blasting the Big 4 banks for creating a playing field that makes “loyal customers ripe for exploitation”.
The draft report found that 50% of people still bank with their first-ever bank, and only one in three customers have considered switching banks in the past two years.
Worse still, changing banks was least likely among those who have a home loan with a major bank.
Other interesting tidbits from the commission’s report:
– Variable interest rates of existing home loan customers average up to 0.4% higher than new customers.
– These higher rates are paid by around 15% of existing customers and equate to an extra $66 to $87 per month.
– Banks increased the rates on all interest-only loans – not just new loans – following a directive from prudential regulator APRA to reduce new interest-only lending from 40% to 30%.
“It is completely unsurprising that, faced with the opportunity to re-price their loan book as a consequence of a regulatory changes, banks did just that,” the commission said.
Switching lenders not as difficult as it seems
With interest rates now well and truly on the rise – and the Big 4 banks being called out for taking customers for granted – now is the perfect time to think about switching to a better home loan deal.
While the commission’s report found many people find it’s “not worth the hassle”, the good news is: we can help make it easy for you.
We can provide you with the tools you need to review your home loan, lock in a rate, or smoothly transition to a better deal, to help you pay off your mortgage as soon as possible.
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