New survey data has revealed that nearly 40 per cent of Australian borrowers are unaware of their mortgage interest rate.
Mortgage Choice’s Australian Financial Savviness Whitepaper has revealed that 38 per cent of respondents said that they did not know the interest rate on their home loan.
Further, the whitepaper said that Australians over the age of 60 were most likely to be unaware of the interest rate on their mortgage (46 per cent).
Of the surveyed respondents under the age of 30, 40.4 per cent did not know their interest rate.
Borrowers aged between 30 and 39 were most likely to know their mortgage rate, with 36 per cent unaware of their rate.
Chief executive officer of Mortgage Choice John Flavell claimed that interest rate ignorance could cost borrowers in the long term.
“The fact that two in five Australians do not know the interest on their mortgage is alarming,” Mr Flavell said.
“It seems for many borrowers it is easy to take a set-and-forget attitude towards their mortgage. However, this can end up costing them substantially over the longer term.
“A home loan is one of the biggest financial investments a person will make in their lifetime. And, if they don’t review it on a regular basis, they could end paying a lot more than they should.”
Mr Flavell noted that, in the past two years, the cash rate has been reduced by 50 basis points and a portion of this has been passed on to mortgage holders in the form of lower rates.
“As such, anyone who hasn’t reviewed their mortgage in the past two years could find that the interest rate on their home loan is significantly higher than it needs to be,” the CEO said.
“In recent months, we have seen many of Australia’s lenders adjust the pricing across their owner-occupied and investment home loan products.
“These slight changes can make a significant difference to what a borrower has to pay each month.”
The CEO also noted that borrowers should review their mortgages at least once a year if they hope to reap the benefits of savings, suggesting further that borrowers seek financial advice.
“Those borrowers who don’t want to miss out on savings are advised to review their mortgage at least once a year,” Mr Flavell added.
“Most importantly, they should be speaking to a mortgage broker who can assess their current home loan and ensure that they are in the best product with the most competitive interest rate for their needs.”
[Related: RBA reveals cash rate decision]
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