Hi Property Lover's
I Came across this article on Australian Property Investor that I thought was a good read.
Borrowers using Australia's major banks pay standard variable interest rates that are 0.32 per cent higher than other lenders on average, RateCity research has found.
That equates to Australians paying an extra $1.33 billion in extra mortgage interest to the banks, RateCity chief executive Damian Smith says.
Over the life of a typical 25-year loan term, the interest rate difference between the major banks and other lenders could be worth more than $17,700 in extra interest charges to the average household, RateCity notes.
Yet the major banks - ANZ, Commonwealth Bank, NAB and Westpac - make up three-quarters of the variable mortgage market, which equals about 1.88 million households.
"The major four banks don't need to keep a competitive standard variable home loan rate because they hold the majority of mortgage customers," Smith says.
"Their position is to be competitive on basic home loan rates, where the major four are on par with other lenders."
RateCity says the average basic variable rate of the major four banks is currently 6.28 per cent for residential home loans, compared to an average of 6.27 per cent for other lenders.
"There's a huge amount of brand loyalty for the big four banks in Australia and borrowers should not limit their decisions to a handful of banks based on brand recognition alone," Smith says.
"For instance, there are many smaller lenders that may fight harder for your business or you could save thousands of dollars by choosing a basic home loan rather than a standard variable deal."
Smith notes the big four banks are often willing to negotiate rates for individual customers.
"While they won't advertise their willingness to negotiate, we regularly see examples of individual managers being able to reduce fees, or cut rates.
"Customers need to compare all their options, and come equipped to any discussions with their branch manager with details of what they can get from another institution.
More and more, we see that knowledge is power when it comes to negotiating a better deal."
This information was gathered from:
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