Better deals for new, not existing customers, leaves many dissatisfied
Australian borrowers feel undervalued by their current lenders and will consider switching to a different lender if they do not get offered better deals, according to a new survey from broker network Mortgage Choice.
More than half (52%) of the home loan customers who participated in the survey said they either knew they weren’t receiving the best interest rate offered by their lender or they weren’t sure they were receiving the best rate available.
Additionally, 71% of the participants said they would be “very likely” or “somewhat likely” to switch lenders if they felt they were no longer getting the best rate.
Mortgage Choice CEO Anthony Waldron (pictured above) said many lenders fail to reward existing customers for loyalty, opting instead to offer low introductory rates and cashback deals in a bid to remain competitive and attract new customers.
The Mortgage Choice survey, released on Monday, January 16, also found that 68% of borrowers want lenders to offer the same rates to both new and existing customers so they wouldn’t need to switch lenders to secure a better rate.
“Borrowers are telling us they want pricing parity between new and existing customers,” Waldron said. “They believe they should be rewarded for their proven repayment history and for choosing to stay with their current lender instead of switching.”
It pays to shop around when refinancing
With interest rates at record highs, Waldron said borrowers should not be complacent with their current deal and advised them to consult with a broker in order to compare a wide range of products and lenders to be certain that “you’re getting the best loan for your needs”.
“Unless Australian lenders begin offering the same rates to new and existing customers rather than focusing on low introductory rates and cashback offers, it will pay to regularly review your home loan,” he said.
A previous Mortgage Choice survey of over 1,000 home loan customers, released on January 9, found that almost one-third (31%) are considering refinancing their home loan within the next 12 months.
The survey, commissioned by Mortgage Choice and carried out by Honeycomb Strategy, also found that 16% borrowers who have refinanced their home loan within the past two years said chose to do so because their lender would not give them the same rate as new customers.
Borrowers wanting to refinance were mainly drive by the the desire to secure a better interest rate (58%) or reduce repayments (35%).
The research also showed the three groups mostly likely to refinance. Nearly half (44%) of borrowers aged between 35 and 44 are considering refinancing, along with 41% of borrowers who have refinanced their loan within the past two years and 38% of borrowers who have used a mortgage broker before.
Read next: Reasons why you should use a mortgage broker.
