With incessant talk of interest rates in the news on a daily basis and constant speculation as to will they or won’t they go up, if they do – when will it happen and why, what state is the economy in with regard to that all important inflation issue and blah, blah, blah, blah….
Sorry, did I lose you for a minute there? Not surprised really given the findings of a recent report that revealed almost one in three borrowers have no idea what interest rate they are being charged by their lender as they become rate fatigued. Understandably, many have switched off and put this little topic in the too hard basket, or perhaps more aptly, the “Do I really have to think about this?” basket.
Thirty per cent of respondents in the CoreData survey said they were not aware that their lender had increased rates by more than the Reserve Bank’s official 25 basis point rise last year. And of those people who did realise their bank slugged them with an extra hit to the hip pocket above the official cash rate rise, the majority said they weren’t going to consider changing their lender or mortgage product because of it.
Wayne Swan would be devastated to learn that most Australians couldn’t give a flying fig about exit fees either, despite the political barrow he has been intently pushing for months now, as if he is the new wonder boy of borrowers; saving mortgage holders by slaying one fire-breathing fee at a time. Only 14% of those surveyed said they would possibly change lenders if they didn’t have to cough up an exit fee for the privilege of doing so.
Essentially, when it comes to the banks people still feel the same way they have for decades. Who cares? What do they do for me and what will they ever do for me? And that’s a fair enough question when us “simple folk” hear about their CEO’s getting million dollar bonuses for raking in enormous profits at whose expense? Oh that’s right…ours!
With this type of pay for profit, it’s no surprise that Australians have such low expectations of the big bad banking sector in general and in particular, the mortgage market.
Consumer Action Law Centre spokeswoman Eileen Kerrigan says, “Australian banks have been so uncompetitive for such a long time it’s not surprising many consumers have switched off from the interest rates debate, figuring there’s little point in switching lenders.”
While this is an understandable attitude, the fact remains that there are mortgage products and then there are mortgage products. In other words, there are still deals to be done, you just have to know where to look and what to look for.
Kerrigan says, “…engaged consumers who do take the trouble to watch and compare rates will almost always find that there are better deals out there and not necessarily with any of the Big Four.”
So yes, it does pay to shop around and take a wee bit of interest in whether or not your current lender is…how do I put this delicately…having their tawdry way with you.
While I don’t for a second believe that the impending government legislation abolishing exit fees will make a lick of difference when it comes to competition, I do know that an element of competition does already exist in the mortgage arena. And a good broker should be able to navigate you through the maze of offers out there to point you in the direction of the right one that will potentially save you thousands over the life of your loan.
By enlisting professional help and changing to a lender who can offer you something better than what you’re currently getting, you will be keeping what little competition there is in the finance sector alive and well and sending a clear message to the banks that it’s not about how much noise they can make that counts, at the end of the day – it’s all about the money. Now that’s a message they will surely understand!