Because home loan borrowers don't bother to shop around for the best home loan they are paying an extra $2.7 billion a year in repayments.
According to the financial research company InfoChoice 90 per cent of homebuyers are still choosing one of the more expensive big four banks instead of the smaller lenders.
The research found that after this week's interest rate increases by the major banks, there were still more than 60 other lenders that had cheaper home loan rates.
Shaun Cornelius chief executive of InfoChoice stated that although Australian consumers were pretty knowledgeable when it comes to their finances they still miss out on saving opportunities when it comes to choosing the cheapest home loans. Australians should take the time and make an effort to shop around for a better deal.
By consumers only looking at the major banks they are not doing themselves any favours.
According to the survey, the average standard variable mortgage rate from the big four was more than half a percentage point higher than the nearest non-bank rival.
Mr. Cornelius also pointed out that the difference between the big banks and a more competitive lender could add as much as an extra three years of repayments to the average loan.
Claims that consumers have little choice but to go with the big four is totally incorrect. There is plenty competition out there and it is now up to the consumer to take responsibility for searching for and locking in the best possible deal.
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