ACCC urges Aussies to switch mortgages

The ACCC has released its Home loan price inquiry report, which reports that many Australians are needlessly paying far more than they need to on their mortgages and recommends they switch lenders to obtain a lower rate:

The final report of the ACCC’s Home loan price inquiry highlights that many borrowers could save money by seeking a lower rate from their existing lender or switching to a new lender…

“A significant number of Australian home loan borrowers have not switched lenders for several years, yet they stand to save so much money by doing so,” ACCC Chair Rod Sims said.

“There are factors standing in the way of home loan borrowers switching lenders, such as a lack of clear and transparent pricing, as well as inconvenience and time costs, but for many borrowers switching will be worth the effort”…

The ACCC found that, as at September 2020, borrowers with home loans between three and five years old paid on average about 58 basis points more than the average interest rate paid for new loans. Such a borrower with a home loan of $250,000 could save more than $1,400 in interest in the first year by switching to a loan with the lower, average interest rate paid for new loans. Over the remaining term of the loan, that borrower could save more than $17,000 in interest.

The next graphic is instructive. It shows clearly that the older the mortgage, the higher in interest rate (other things equal):

For example, borrowers with mortgages more than 10 years old were, on average, paying more than 1% more than the average interest rate paid for new home loans.

The next chart, which shows average mortgage interest rates over time by vintage, also shows that this relationship between mortgage age and interest rate has been a long-term feature of the Australian home loan market:

Clearly, anybody with a mortgage paying above 3% should actively pursue a better deal. A few phone calls could save you thousands.

Unconventional Economist
Latest posts by Unconventional Economist (see all)


  1. TheRedEconomistMEMBER

    All good if you still have a full time gig.

    But if you are now either contracting, on reduced hours or Job seeker, then you have to stay with your incumbent provider as you are not going to get finance anywhere else.

  2. Loans should be transferable. That is, I ring X lender, they look at my loan online and they make me an offer. Same loan number etc.

    At the moment it’s so complicated transferring loans.

    Let them auction for our business. Everything is competition based except when it comes to big business gouging us.

    Insurance is off the scale. I had increases of over 40% on houses after the fires.

    • +1 completely agree. Not to mention all the jargon around home loans and comparable rates* disclaimers etc.. it’s a jungle. Deliberately made confusing to keep the punters at a disadvantage. I’m sure of it.

      • Comparable rate on $150,000. Who the f*k has a mortgage for only $150K (excluding you Gavin) ??

        • Only ugly non successful types like me have small debt. Go big or go home as Reusa would say.

    • Not totally opposed to this but it will mean greater up front costs. Possibly with some sort of time frame penalty/lock in like phone contracts if you don’t pay the larger upfront costs and it could work?

  3. Discussed with a neighbor about this and even though they work for one of the big 4 they would still have to fork out $25k in break fees to get the lower rate. Over all it didn’t work out.

    • Hmm, I thought that excessive break fees were removed by the ACCC/BankingRoyCom as being a restriction on trade/anticompetitive, or something like that….