Mortgage holders that are self-employed are paying as much as 1 per cent more than the salaried counterparts, new data from HashChing has found.
According to the 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”.
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 well above the average home loan interest rate.
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. HashChing suggested that for a $500,000 loan over a 25-year term, this can amount to paying an additional $87,383 over the life of the loan.
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 those looking to refinance over the two months, 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: NLG reports record high in refinancing]
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