Home loan ignorance is bliss? 85% of borrowers don’t know their mortgage rate
Most homeowners paying off a mortgage have no idea what rate their lender is charging them in interest annually, leaving thousands of dollars at stake as a result.
That’s according to the latest Know your Numbers Index commissioned by online provider UBank, where 1,021 borrowers participated in a survey aimed at gaging their money management skills.
Apart from the fact that 85% couldn’t recall their home loan rate, more than half of those quizzed admitted they felt stressed about their personal finances. Another cause for concern, is the Index’s finding that around a third of Aussies constantly worry about the future.
“Unfortunately, more and more Australians are making significant sacrifices due to being financially overstretched,” said UBank’s CEO, Lee Hatton.
“The better acquainted you are with your numbers, the less stress and more money you’ll have in your back pocket. It’s important Australians borrow less and live more.”
Hatton also encouraged homeowners to prioritise searching for the best mortgage rate, based on their personal needs.
These findings come as capital city property prices are steadily increasing, while the days of historically low interest rates appeared to be numbered.
Here at Mozo, we’ve already seen a barrage of home loan rate hikes hit our database in 2017, after a period of providers raising investor rates near the end of last year.
In fact, our latest data from the last week of December through January, found that more rate rises were applied to owner occupier mortgages than investor loans.
Despite all the mortgage stress borrowers are feeling in the current interest rate climate, providers are still offering competitively low rates from 3.35%.
And if you switched from the average variable rate to the lowest, our mortgage repayment calculator shows that you’d be charged $3,288 less in interest annually on a $500k loan (based on making monthly principal and interest repayments over 25 years).
* 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.
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