Banks Post Record Profits at Your Expense
On May 2nd, ANZ posted a record $3.4 billion cash profit for the 6 months to 31st March 2017, which is up 23% on last year. Other major lenders are tipped to release similar results, which seems at odds with their current trend of out-of-cycle interest rate hikes, even when the official rate remains unchanged at a record low of 1.5%pa.
This leads me to ask the question … do you know what interest rate you’re currently paying on your home loan?
If you don’t know, unfortunately you’re not alone and you’re contributing to the record profits the banks are currently declaring. According to a recent survey carried out by Pocketbook of 200,000+ users, 90% of Australians don’t know what their home loan interest rate is and the average Aussie pays up to 1.75%pa more interest than the lowest available rate.
Since the average home loan sits around $450,000, you could be paying up to $7,875 more on your loan every year than is necessary (and you don’t get any extra benefits or services for this overpayment). If you were to take advantage of a lower interest rate and invested the savings back into your home loan, you’d knock around 5 years off the term of your loan and save tens of thousands in interest. In fact, we recently saved a client $62,000 in interest and 5 years off his loan term.
This 90% statistic is particularly concerning when you consider the average Sydneysider spends almost half their household income paying their mortgage and Perth home owners pay around a third of their income into their home loan according to Corelogic. It’s the single biggest expense for most Australian home owners and yet most people are apathetic and don’t shop around for a better interest rate.
Let’s face it, it’s not in the best interest of your bank (pardon the pun) to contact you and offer you a lower interest rate, even though they are most likely offering new customers much better rates than you’re currently enjoying. I’ve been saying for years that banks should be looking after their long-term loyal customers and offering them the lowest rates, but that’s not how the system works unfortunately.
If your interest rate doesn’t have a 3 at the front, you’re paying thousands too much interest to your bank and they may not be the best option for you anymore. Contact me ASAP and I’ll get my team of brokers to find you the best option and show you how much you could save. It doesn’t cost you anything to explore your options, but it could cost you thousands in interest if you don’t! What have you got to lose?