According to research by uno, a home loan broker and management service, home loans are one of the key drivers of financial waste for Australians, with an estimated $4.2 billion lost annually to unnecessary mortgage interest costs.
The uno household financial waste report dug deeper into a 2018 ACCC finding that “existing borrowers who do not actively shop around for a better deal on a regular basis are the main losers from opaque discretionary pricing”.
According to the report, unnecessary mortgage interest costs are “possibly the most insidious” driver of Australian financial waste as mortgage expenses are usually thought of as “seeming unavoidable expenses”.
Uno CEO Anthony Justice said there are a number of factors that explain why consumers aren’t taking action on sub-par home loans, since “most home owners purchase or refinance their home feeling confident they’re on a good rate – and they usually are”.
He said cracks only begin to show a few years down the track, “by which time consumers no longer think about their home loan as something they should be fighting to get a good deal on”.
According to uno, external factors like interest rates, the changing value of property, shifting personal financial situations and new lending products entering the market can all impact how well a loan is performing.
So, after a couple of years, a “good deal” may become a source of significant household financial waste, it was explained.
Of concern to the report writers was uno’s finding and flagging of the fact that more than half (53 per cent) of home owners don’t even know what their current interest rate is, while 59 per cent of people have never asked their bank or broker for a better rate on their home loan.
An even higher proportion of mortgagees (78 per cent) have also never had a conversation about strategies for paying off a home loan faster, the report also said.
