HOME loan customers who stick with the same lender could be costing themselves big, new research shows.
While interest rates have remained at historically low levels — many below the four per cent mark — borrowers can nab some razor-sharp deals if they hunt around.
Just last week borrowers at National Australia Bank and Westpac hiked their variable rate loans despite the Reserve Bank of Australia holding the cash rate at 1.5 percent this month.
Home loan customers can get some great deals under four per cent if they shop around.
But for the lazier customers, chances are they are getting ripped off by being loyal to their lender.
Instead, borrowers need to vote with their feet and jump lenders if they can secure themselves a better deal.
Analysis by financial comparison website Canstar revealed borrowers with a standard $300,000 home loan over a 30-year term pay an average variable rate of 4.41 per cent, which means monthly repayments of $1503.
But the 80 percent of customers who bank with the big four are likely paying more than they need to — the average variable rate of the big four banks is 4.52 percent and monthly repayments are $1522.
This means customers would pay almost $6800 extra in interest by sticking with a bigger lender over the loan term.
Canstar’s spokeswoman Belinda Williamson said sticking with the same lender and loan product for a lengthy period of time could be costly.
“You could easily be missing out on a better-priced loan and be out of the loop on new features that could actually help you to repay your home loan sooner,’’ she said.
Ms Williamson urges customers to look for a loan with cheaper fees and one that offers the flexibility of an offset account —. a day-to-day account linked to your loan.
Having a $300,000 loan with $10,000 in an offset account means you will only be charged interest on $290,000.
Some lenders do however reward loyalty. Ubank, a subsidiary of National Australia Bank, gives customers a 10 basis point discount off the standard variable home loan rate if they have held their loan with them for at least three consecutive years or once a fixed term has expired.
The big four banks compete heavily on rates but there are many more deals available that could save money.
National Australia Bank’s general manager of home lending Meg Bonighton said there are ways borrowers can make sure they are getting the best possible deal.
“Customers should speak to their banker or broker about what fees and charges might be able to be waived, both on their home loan or on another product they might have,’’ she said.
Customers should also use financial comparison websites to see what deals are available and phone up their bank and ask for a better deal or threaten to leave.
By Sophie Elsworth, News Corp Australia Network