Borrowers could save by switching to better value products: CANSTAR

While borrowers wait each month to see whether the Reserve Bank moves on rates, financial research organisation CANSTAR advises that some mortgage holders could save significant amounts by simply switching to better-value products.  

Commenting ahead of today’s rates announcement, research manager Mitchell Watson, said: “This month, the expectation is that rates will be left on hold. Post federal election consumer confidence is at a high and business confidence seems to be improving. The media focus at the moment is on the existence or otherwise of a housing bubble and, while that may or may not be the case, all signs point to rates being left on hold.  

“Irrespective of the RBA decision, though, mortgage holders need to check the interest rate they’re paying and ensure that it’s at the lower end of the scale. Currently, on the CANSTAR database, the difference between the highest and lowest standard variable mortgage rate is 2% – the equivalent of seven RBA rate cuts all the way back to December 2011.  

‘’On a 25-year $300,000 loan, that equates to $360 in additional monthly repayments.

Over the life of the loan it adds up to more than $100,000 in additional interest payments.  

‘’The difference between the average and lowest standard variable rate is just shy of 1%, or the equivalent of the past four RBA rate cuts.’’  

Source: www.canstar.com.au. Represents average rate across products on CANSTAR’s database      

                Source: Canstar

CANSTAR’S Home Loan Star Ratings, released last week, compare 1832 home loans from 105 lenders across seven categories of floating, fixed rate and line-of-credit loans for both residential and investment purposes.