‘She’ll be right attitude’ costing Aussie mortgage holders long-term
New research from Mozo for the 2024 Home Loan Report discovered that a startling percentage of mortgage holders think refinancing isn’t worth the effort when it could save them tens of thousands.
A nationally representative survey of over 2,550 Australian adults found that 74% of home loan borrowers believe refinancing is too much of a hassle and that it’s easier to just stick with the same provider.
Mozo finance expert, Rachel Wastell, says Australian borrowers are making a poor choice by burying their heads in the sand instead of refinancing.
“Mortgage holders with a she’ll be right attitude could be paying tens of thousands of dollars more in interest than those who switch to a lower rate,” said Wastell.
It’s a problematic attitude because Mozo also found that those who compare home loans every six months have an average variable rate that is 0.38% lower than those who haven’t compared since getting their home loan.
How often borrowers compare interest rates | The group’s average variable interest rate | Estimated monthly repayment on a $500k home loan over 25 years |
Every 6 months | 6.14% p.a. | $3,264 |
Once a year | 6.20% p.a. | $3,283 |
Every 2 years or more | 6.48% p.a. | $3,370 |
Never since getting their home loan | 6.52% p.a. | $3,382 |
As you can see, borrowers who compare more often typically have a lower interest rate on average. This is because variable rates change frequently, especially when the Reserve Bank of Australia (RBA) plays around with the cash rate.
Just two years ago, home loan interest rates were at historic lows when the RBA pushed the cash rate down to 0.10% to kickstart Australia’s economic recovery from the pandemic.
The unusually sharp 4.25% increase in the cash rate since May 2022 would’ve bumped up most people’s rates and repayments considerably – unless they had the foresight (or luck) to get a fixed home loan for a few years.
While you might look at the $118 per month saving that a 0.38% lower interest rate could get you and think, ‘Geez, what’s the big fuss?’, calculating the world of difference it makes, in the long run, should convince you to take a second look at your rate.
The long-term ramifications of paying a higher interest rate
“Home loans are decades of debt and interest compounds, so a rate difference of less than 1% can equate to five figures in savings over a 25-year loan term,” said Wastell.
Using a mortgage repayment calculator, we can work out that those who compare interest rates every six months, at a rate of 6.14% p.a., could wind up paying $479,330 in total interest over 25 years. That’s a lot, right? It’s almost the same as the amount they borrowed in the first place.
Let’s see how it works out for those who haven’t compared rates since getting their home loan, who are charged, on average, 0.38% more… At a rate of 6.52% p.a., the total interest you’ll pay after 25 years is $514,686. That’s an extra $35,356 that goes straight to your lender, instead of towards a deposit on an investment property, or into your superannuation.
Sure, you might have to cover some additional costs when you refinance, such as discharge and valuation fees, but these are typically negligible compared with what you could save on interest over time.
So, if you’re one of the 74% of Australians who haven’t shopped around for a new home loan since buying your place, take this as a sign to compare refinance rates and see if you can find a cheap home loan that works for you.
You might find the best home loans have exactly what you’re looking for, or you might want to learn about the different home loan features you’ll encounter during your home loan comparison before you dive in.
Take a gander at these featured home loans to get started. Do any of these beat your current lender’s offer?
Home loan comparisons on Mozo - last updated 6 May 2024
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Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Owner Occupier, LVR <80%
interest rate
comparison rate
Initial monthly repayment5.99% p.a. variable5.90% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- interest rate
- 5.99% p.a. variable
- comparison rate
- 5.90% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
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Basic Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR<70%
interest rate
comparison rate
Initial monthly repayment5.99% p.a.
fixed 3 years6.12% p.a.No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
CompareCompareBasic Home Loan
No upfront or ongoing fees. Free extra repayments and redraw facility. Option to earn Qantas points. Min 30% deposit required. Borrow up to $750,000.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.12% p.a.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.12% p.a.
- Upfront fees
- $350
- Ongoing fees
- $0.00
- Discharge Fee
- $400.00
- Extra repayments
- yes - up to $10,000 p.a.
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Macquarie Basic Home Loan
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Discounted Home Value Loan
Owner Occupier, Principal & Interest, LVR 70-80%
interest rate
comparison rate
Initial monthly repayment6.09% p.a. variable6.09% p.a.Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
CompareCompareDiscounted Home Value Loan
Enjoy competitive rates for owner occupiers. Enjoy unlimited free extra repayments. Flexibility to redraw additional payments for free. No ongoing monthly service fee. Settlement fee waived on new borrowings from $50,000 (T&Cs apply).
- interest rate
- 6.09% p.a. variable
- comparison rate
- 6.09% p.a.
- interest rate
- 6.09% p.a. variable
- comparison rate
- 6.09% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $15,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the HSBC Discounted Home Value Loan
-
Featured Product
Mozo experts choice awards won:
- Low Cost Home Loan - 2024
Unloan Variable
Investment, LVR <80%
interest rate
comparison rate
Initial monthly repayment6.29% p.a. variable6.20% p.a.Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
CompareCompareUnloan Variable
Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- interest rate
- 6.29% p.a. variable
- comparison rate
- 6.20% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Investor
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the Unloan Unloan Variable
-
Flex Home Loan
Fixed, Owner Occupier, Principal & Interest, LVR 60-70%
interest rate
comparison rate
Initial monthly repayment5.99% p.a.
fixed 3 years6.41% p.a.Competitive fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 20% deposit required.
CompareCompareFlex Home Loan
Competitive fixed rate. Multiple offset accounts available. Borrowers can also make extra repayments. Redraw facility available. Simple online application process. 20% deposit required.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.41% p.a.
- interest rate
- 5.99% p.a.
fixed 3 years
- comparison rate
- 6.41% p.a.
- Upfront fees
- $250
- Ongoing fees
- $250.00 yearly
- Discharge Fee
- $300.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 70.00%
- minimum borrowing amount
- -
- maximum borrowing amount
- -
- type of mortgage
- Fixed
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the ubank Flex Home Loan
-
Variable Home Loan 90
Principal and Interest, LVR <90%
interest rate
comparison rate
Initial monthly repayment6.04% p.a. variable6.06% p.a.Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.
CompareCompareVariable Home Loan 90
Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.
- interest rate
- 6.04% p.a. variable
- comparison rate
- 6.06% p.a.
- interest rate
- 6.04% p.a. variable
- comparison rate
- 6.06% p.a.
- Upfront fees
- $530
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
- Repayment types
- Principal & Interest
- Availability
- Owner Occupier
- Repayment options
- Weekly, Fortnightly, Monthly
- Special Offers
- -
Read our Mozo Review to learn more about the loans.com.au Variable Home Loan 90
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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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