Australians losing $2.7 billion in high home loan fees

Thursday June 18, 2009

A recent research report by InfoChoice has found that despite banks typically charging higher fees than their smaller lender competitors, almost 90 percent of home buyers are still choosing a major bank as their home loan option. This equates to repayments of an additional $2.7 billion per year purely due to higher fees associated with home loans.

Research found that after the recent interest rate increases by the major Australian banks there are approximately 60 other financial institutions and lenders that offer cheaper rates on home loans. Some explanations for this trend to remain with home loans accounts with the higher fees is the fact that during the Global Financial Crisis many people are wishing to remain with a brand they recognize and may have always banked with.

However, the major banks have been receiving greater scrutiny from the media after they have raised the variable home loan rate despite the Reserve Bank of Australia's movements in interest rates.

Figures show that the average standard variable mortgage rate is at least half a percentage point cheaper from any non-bank competitors that with the major four banks on the Australian market. The research report concluded that the difference between the home loan banks accounts and smaller lenders home loans can be up to three additional years of repayments with the higher rates.

This report comes as another blow to the Commonwealth Bank who has now admitted to its faults in terms of the $3 billion collapse of Storm Financial and the thousands of customers that have been affected.

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