Powered by MOMENTUM MEDIA
subscribe to our newsletter

Borrowers paying $4.2bn in mortgage interest ‘waste’

Mortgage-holders are wasting approximately $4.2 billion annually in “unnecessary” interest costs, according to new research.

According to online brokerage uno Home Loans’ Household Financial Waste Report, developed with data and insights from A.T. Kearney and CoreData as well as findings from uno’s loanScore data, Australians are wasting billions each year on “avoidable” costs, including $4.2 billion in avoidable interest on mortgage repayments, more than $1 billion on standby energy costs, $550 million in bank exception fees and $9 billion on food waste.

Reflecting on the excess mortgage interest costs paid by borrowers each year, uno Home Loans CEO Anthony Justice commented: “Most home owners purchase or refinance their home feeling confident they’re on a good rate – and they usually are.

“The cracks only begin to show a few years down the track, by which time consumers no longer think about their home loan as something they should be fighting to get a good deal on.”

The uno research also found that 53 per cent of borrowers don’t know what their current interest rate is, with more than half (59 per cent) conceding they have never asked their bank or broker for a better rate on their home loan.

Advertisement
Advertisement

Moreover, almost eight in 10 (78 per cent) respondents said they have never discussed strategies for paying off their loan faster. 

uno launches new tool 

The online brokerage has created a new tool that it has said would help address the issues identified in its research.

Uno’s new Active Home Loan Management service has been launched, designed to proactively manage a borrower’s home loan on their behalf.

Mr Justice told Mortgage Business that the new service, powered by the loanScore platform, allows borrowers to review and assess their existing home loan within a couple of minutes, by providing them with a score out of 100, which provides them with an indication of the potential savings they can make, either by renegotiating with the existing lender or by switching to another lender. 

PROMOTED CONTENT


He added: “The second phase is to alert the customer. We’ll send the customer an update once a month, and we’ll also allow them to set a threshold, which serves as a trigger, so if we can find a deal that overcomes that threshold – so if they say to us they want to save over $5,000 over the next three years and we find a deal that can do that – we’ll send them an alert to let them know we’ve found them a deal that can do that.”

If a client is satisfied with the deal proposed by the platform, uno then provides them with access to a broker who would then renegotiate the deal with their existing lender or switch their loan to another provider.

The service is available to both existing uno customers and the broader market.

[Related: Banks urged to release borrowers from ‘mortgage prisons’]

Borrowers paying $4.2bn in mortgage interest ‘waste’
Australian cash
mortgagebusiness

Are you a new-to-industry broker in the process of growing your business? Then there’s some great news: The Adviser’s New Broker Academy is back in 2021 and will provide you with essential insights into cutting-edge tools, strategies and processes to fast-track to success. Don’t miss your chance to attend. To secure your FREE place, visit newbroker.com.au now!

Charbel Kadib

Charbel Kadib is the news editor on the mortgages titles at Momentum Media.

Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.

You can email Charbel on: This email address is being protected from spambots. You need JavaScript enabled to view it.

Latest News

The ASX-listed bank’s chairman will depart in March, with a board director to take his place. ...

The central bank has refused to budge from its inflation target range and time frame to raise rates while acknowledging that less accommodat...

The number of people wanting to bank in person at a branch continues to drop, with less than 20 per cent electing to do so, according to new...

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think APRA's bank buffer changes will see more borrowers use non-banks?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.