High Bank Home Loans Rates Costing Billions
18 June 2009
Australians are paying $2.7 billion per year on higher rates on home loans according to a recent report by InfoChoice, through the big banks dominance as preferred choice of lender. The research report concluded that in spite of the four major bank brands charging higher rates on their home loans, almost 90 percent of homebuyers remain with them as their home loan lender, equating to an additional $2.7 billion in repayments per year.
The report found that while the four major bank brands in Australia have this overwhelming dominance, there are approximately 60 other financial lenders that offer cheaper rates on home loans, at least half a percentage point cheaper. This translates to major bank customers paying up to three years longer than their small lender home loan counterparts.
Despite the obvious advantages to switching to smaller lenders on the market it appears that the trend to remain with the major banks may be based on the implied safety the big brand brings in the current global economic climate. The majority of people appear to stay with the same bank that has always served them and feel they have an established relationship.
However, it cannot be ignored that some major bank brands in Australia are experiencing further criticism after raising their the variable home loan rate independent of the Reserve Bank of Australia. Today the Westpac-owned St George announced that it has raised the interest rates by 50 basis points on its three, four and five year fixed mortgages.
This follows the Commonwealth Bank raising its interest rates by 10 basis points on Monday 15th June on its standard variable home loan, fixed home loans and Residentially Secured Better Business Loan. National Australia Bank also reported a rise in interest rates by up to 40 basis points on their range of fixed home loans.
These rises in interest rates follow rate rises in April on fixed mortgages that all banks performed, with ANZ bank rising rates slightly earlier.
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