Powered by MOMENTUM MEDIA
the adviser logo
Borrower

Self-employed borrowers paying up to 1% more

by Reporter5 minute read

Mortgage holders that are self-employed are paying as much as 1 per cent more than their salaried counterparts, new data from HashChing has found.

According to the online mortgage marketplace, borrowers in several suburbs in Sydney, Melbourne and Brisbane are paying more than 7 per cent on their mortgages, which HashChing says can be attributed to the fact that these areas have a “large population of self-employed borrowers”. 

To continue reading the rest of this article, create a free account
Already have an account? Sign in

By looking at more than 1,000 mortgage refinance applications made through HashChing between December 2016 and January 2017, the company identified several suburbs in Sydney, Melbourne and Brisbane where borrowers were paying above the average home loan interest rate.

Suburb breakdown

Advertisement
Advertisement

The average interest rate for self-employed borrowers was found to be as much as 1 per cent higher than it was for salaried borrowers. 

In Sydney, the average interest rate was found to be 4.46 per cent, but mortgagees in The Ponds, Doonside, Quakers Hill, Campbelltown and Stanhope Gardens are paying up to 7.88 per cent. 

Likewise, in Melbourne the average interest rate was 4.46 per cent, but borrowers in Blackburn, Glen Waverley, South Morang, Mernda, Narre Warren and Cranbourne were paying as much as 7.04 per cent interest.

In Brisbane, home owners in Coomera, Advancetown, Austinville, Labrador, Surfers Paradise, Brendale and Springbrook were found to be paying off home loans with interest rates as high as 7.39 per cent, despite the average interest rate for Brisbane being 4.72 per cent.

Mandeep Sodhi, CEO of HashChing, commented: “The data demonstrates that mortgagees who are paying interest rates of more than 5 per cent tend to be currently or formerly self-employed, and this is due to a misconception that they aren’t able to negotiate a better rate.

“Previously, banks charged higher interest rates for self-employed borrowers as they were deemed riskier due to an unstable income. However, the market has changed, and banks have become more amenable to offering a competitive interest rate to these customers,” he said.

A large proportion of those applying for refinancing through HashChing were customers of major banks, with Commonwealth Bank customers making up 17 per cent of applicants, 13 per cent coming from NAB, 13 per cent from ANZ and 12 per cent from Westpac.

Mr Sodhi commented: “There’s now an exodus from the big banks and a rush to refinance with more competitive lenders. 

“Despite the fact that the big four banks (along with some of the smaller financial institutions) have hiked up their interest rates, there are still plenty of low interest rate options out there for borrowers who do their homework.”

[Related: Rate hikes ‘normal’, says former MFAA chief]

Self-employed borrowers paying up to 1% more
cashinhand
TheAdviser logo
cashinhand

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

Anja Pannek CEO PLAN

Anja Pannek named MFAA CEO

The board of the Mortgage & Finance Association of Australia (MFAA) has confirmed that Anja Pannek will be the...

READ MORE
mike felton mfaa ta jdayl5

Aggregator heads reflect on Mike Felton’s legacy

Following on the news that Mike Felton is to retire next month and step down as chief executive of the Mortgage &...

READ MORE
melanie kiely afg ta mzh8zm

AFG non-executive director steps down from board

Australian Finance Group Ltd (AFG) has advised that Melanie Kiely will be stepping down from the AFG board to...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more