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Australian mortgage borrowers are losing thousands of dollars by not keeping an eye on the market for better rates, according to a government report.
The report revealed the findings of an inquiry by the Australian Competition and Consumer Commission (ACCC) into home loan prices, according to The Australian. The inquiry, which began last year, scrutinized the roadblocks faced by borrowers switching to an alternative mortgage supplier.
The report found that Australians looking to switch lenders or mortgage products faced obstacles at every step of the process. It also found that new borrowers received better deals than existing borrowers – and the older a loan got, the worse deal the borrower was getting.
Borrowers who asked for a better deal or switched lenders could save thousands of dollars in the first year alone, The Australian reported. That could translate to savings of $17,000 over the life of a $250,000 loan.
The report found that “significant gains” were available to borrowers who switched home loans – but too many homeowners didn’t bother searching the market for better deals.
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The ACCC made four recommendations to make the process more transparent. Among those recommendations is a requirement that lenders update borrowers annually on how their current interest rate compares to the average rate for new loans.
The report also found that borrowers often found pricing information on mortgages too difficult to locate or understand. Even those who did move to switch loans often found the process so expensive or confusing that they gave up.
Therefore, the ACCC is calling for lenders to be required to provide a standardised cancellation form and complete their discharge process within 10 days, The Australian reported.
The federal government will consider the report’s recommendations.