Almost 150,000 Australian households would need financial assistance if home loan rates increased, according to new Finder research.
Many Australian households would be pushed into financial hardship if their home loan rate increased out of cycle, Finder revealed.
A nationally representative survey of 597 Australians with a home loan revealed one in 20 (five per cent) would require financial assistance if their home loan rate went up.
More than half of borrowers (53 per cent) – equivalent to 1.5 million people – would try to negotiate a lower rate with their current lender if they were hit with an out-of-cycle rate rise.
Finder home loans expert Sarah Megginson said the pandemic had left thousands of Australians ‘debt vulnerable’.Â
“Over the past 18 months, so many Aussies have seen their financial reserves drained,” Ms Megginson said.
“There’s a real chance that further economic shock could lead to more people falling behind on their mortgage payments.”
The survey found one in four (25 per cent) would refinance to another lender – that’s 725,000 home owners with a mortgage who would consider switching lenders if their interest rate went up.
Around one in five (18 per cent) would do nothing.
Regardless of whether or not interest rates increase, Ms Megginson urged Australians to shop around for a cheaper mortgage to improve their cash flow.
“Mortgage holders have to make hay while the sun shines,” she said.
“With rates at all-time lows and a rising number of cashback offers, conditions couldn’t be much better to save money on your home loan.
“If you have an older home loan, there’s a good chance you’re paying more than you need to.
“Competition in the market is fierce, so get on the phone and negotiate.
“Ask for a better deal – odds are, the rate your bank is offering new customers is lower than what you’re paying.
“If they won’t give you a better rate, take a walk to another lender and get a better deal. It’s easier than you think and you can save thousands of dollars a year.”
How to get the best deal on a home loan
- Look for a lower rate: The best home loan will always have a low interest rate. The interest rate determines your borrowing costs and the lower the rate, the less interest you pay each month.
- Steer clear of big fees: While you’ll typically have one-off upfront fees for the application or settlement, some home loans charge an ongoing monthly or annual fee. They may seem small, but they can add up.
- Don’t forget the added features: These can offer you more flexibility in how you manage your loan and make repayments. There’s also things like redraw facilities and loan portability to consider.
