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Borrowers can't be bothered changing loans
Released 22 September 2010

Many Australian home owners can’t be bothered switching lenders even if they could save over a thousand dollars on their home loan, according to mortgage broker Loan Market. 

A national survey by Loan Market found 58 per cent of respondents said they would need to save at least $1500 or more a year to be motivated to refinance with another lender.

Loan Market Chief Operating Officer Dean Rushton said the survey results showed that lenders and brokers needed to communicate more effectively about the potential savings from moving mortgages and demystify the process.

“The differences between lenders and the interest rates and conditions they offer has never been wider,”Rushton said.

“But our survey shows that people can’t be bothered switching banks even if they were able to save $1000 to $1500 a year.

“The fact is people can achieve significant annual savings by shopping around and getting a better deal on a mortgage with a much more competitive package.

“If you’re borrowing more than $250,000, then the savings can be even greater.”

The online poll of 380 people found 42 per cent of those surveyed needed to see potential savings of more than $2,000 a year before considering switching loans.

Mr Rushton said a mortgage broker was well placed to review an existing home loan and determine whether a borrower can get a better deal from a rival lender.

“Mortgage holders might have to accept some exit fees from their original lender but it can be worth it if they can negotiate a significant reduction on their interest rate,” he said.

He said home owners were often hesitant to refinance because they believed it would be too much trouble due to the fees and paperwork involved.

“It’s also a simpler process to refinance compared to applying for a new loan,” he said.

Mr Rushton said there were numerous benefits to refinancing, particularly taking the opportunity to reduce debt on credit cards, which have interest rates often more than triple that of an average variable home loan.