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Bank loyalty can cost existing borrowers: ACCC report

Loyalty is an admiral trait when it comes to our friends, family and loved ones. But if you’re extending that virtue to the banks, then there’s a good chance it’s costing you thousands of dollars.

That’s the takeout from the ACCC’s latest Home Loan Price Inquiry interim report.

It shows that although interest rates charged by the big four banks on home loans fell during 2019, existing customers were stung by higher interest rates compared to newer customers, in no small part due to a lack of price transparency.

Price comparison confusion

The report found that the big banks’ home loan pricing practices make it pretty darn difficult for borrowers to compare different mortgage products.

That’s because the headline rates you see when you do your initial research don’t accurately reflect the price most big four bank customers actually pay for their home loans.

Indeed, the ACCC found there’s little difference in the headline variable rates of the big four banks, which on face value quickly deters borrowers from switching it up and refinancing to a lower rate.

But in reality, close to 90% of big four banks home loan customers receive discounts off the headline variable rate. And many of those receive non-transparent discretionary discounts.

So how big are the discounts?

We’re talking pretty big differences here, especially compared to advertised rates.

For example, a borrower with an average-sized principal and interest mortgage of $386,000 could save about $5000 on interest payments in the first year if they went from having no discount to receiving the big four banks’ average discount of 128 basis points.

The report also found the big four bank customers whose principal and interest loans were greater than five years old were paying an average 40 basis points more than those with similar new loans.

That means for a loan of around $200,000 (the average size of a loan more than five years old), a borrower who refinances could save around $850 in interest in the first year.

So what’s the next step?

That’s easy: you owe the bank nothing – in terms of loyalty – so it’s time to see what your options are.

And we can help because we know what rates lenders are really offering – despite what their “headline” rates say.

So if you’re keen to find ways to save interest on your home loan, please get in touch with us at MAKE Finance on 02 6021 6600. We’re happy to walk you through your refinancing options any time.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

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The staff at MAKE Finance Group are experienced and dedicated to providing our clients with exceptional levels of advice and service.

As a full service finance broker, we can save you time and stress as we negotiate with Banks and Financiers on your behalf. Whether it is asset or equipment finance, business finance and advice or even a home loan, we will go to the market on your behalf and find the best possible deal available.

Let us worry about the financials, as we make it happen for you.

Why Partner with Us?

The staff at MAKE Finance Group are experienced and dedicated to providing our clients with exceptional levels of advice and service.

MAKE Finance Group holds sought after commercial lending accreditations and access to a substantial panel of lenders for both Equipment and Business Finance.

As a finance broker MAKE Finance Group saves you time and stress as we negotiate with Banks and Financiers on your behalf. This allows you to keep focused on your business while we do the finance work.

This ensures you receive the best offers with the objective of saving money and increasing profitability.

Testimonials

Here is what a couple of our clients have said about MAKE Finance Group.
  • Geoff at MAKE Finance Group made the process of purchasing an investment property a seamless process. Thanks for your patience Geoff. I would highly recommend Geoff and his team at MAKE for all your finance needs. Cathy, Warrnambool

  • Geoff and Christine helped me from the ground up with acquiring my first home loan, they helped me from the application process all through to small advice on how to take on the new world I've been introduced to. I am honestly glad to have been referred to MAKE Finance Group, I couldn't have found someone as thorough, professional and friendly to have helped me along the way. Paul, Albury  

  • Geoff and the team at MAKE Finance were unbelievably helpful when we needed to refinance our business loan. After a stressful and confusing ordeal with our existing lender, Geoff made re-financing so easy, and it tool very little work from our end to sort everything out. We are so happy with everything sorted and not having to worry about our finance arrangements. We would encourage anyone with any financing needs to go and see Geoff and the team at MAKE Finance, thanks Geoff! Philip and Jenni, Holbrook

  • Thank you to the team at MAKE Finance Group, for helping me purchase my first truck. I cannot thank them enough as they went above and beyond all my expectations and made the whole process easy and stress free, I would highly recommend them to anyone. Rob, Canberra

  • Applying for a business loan (direct through a Bank) was becoming a stressful and difficult task for us as everything had to be discussed over the phone followed by numerous paperwork. Geoff at MAKE Finance Group was our savior. Your personalised service made the application for our business loan & business vehicle loan so easy. We now operate a very successful business & we could not have done this without you. We love your work! Lloyd & Kristy Franchisee of Jim’s Mowing Wodonga East

  • “MAKE Finance Group were an absolute pleasure to deal with. Right from the very beginning, even when we were just asking questions as to how home loans work and how much we could afford, they made the process incredibly easy and put everything into terms that we could understand. There’s a lot involved with buying your first home, but it felt effortless with the superb help from both Jess & Geoff. MAKE Finance Group definitely come highly recommend from us – thanks guys!” Sophie & Zach, Albury

  • “Buying a new car was a big deal for me as I had a very strong love for my only car of 10 years.  I approached MAKE Finance Group to help me source a loan for my new car, and they made me feel 100% positive about making the change, as the process that they followed to obtain the loan was flawless. They came to me which I hugely appreciated, everything was in order and all follow ups and questions were answered without hesitation. I cannot recommend them enough for their professional and friendly service.” Stephanie, Albury

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