Why we need to know the interest rate on our home loans
Paul Ryan | September 08, 2017
One of the great Australian success stories of recent times has been technology company Atlassian.
From modest beginnings in 2002, two young Australians built a business that listed on the New York Stock Exchange for $US3.3B.
It is a brilliant story and one driven by core values such as Don’t #@!% the customer.
In December 2015 it was reported that 8 out of 10 Australians didn’t know the interest rate on their home loan. The research was commissioned by NAB owned UBank.
Statistics such as these are alarming for the financial well-being of every home loan borrower in Australia. Why is it that most of us apparently don’t know how much interest we’re paying on our loans?
The problem with not knowing how much interest you’re paying is that you don’t know how much money you could be saving. For example, by saving money on your home loan you could have more money to spend on other things or you could use the extra money to pay off your home loan in 20 years instead of 30.
Let’s look at it this way. It has been reported that the volume of home loans outstanding in Australia is $1.4 trillion. If every Australian borrower called their lender today and requested a 0.30% rate reduction it would save borrowers, $4.2B in interest annually.
Please don't think for one minute that this can't happen as I've had many clients over the years that have achieved a similar outcome by being proactive with their lender.
We'd have to agree the savings are better off in our pockets than the bank’s, wouldn't we?
So a simple question, why don't we know the interest rate on our home loans?
I've spoken to many borrowers over the years and the common feedback is they aren't sure how to find out or who to ask. I've always found this quite disappointing because as mortgage brokers, finance brokers or bank managers - we should be showing borrowers how to use various lender’s internet banking facilities to keep an eye on the rates.
We should also be staying in touch with our customers and if there is a rate rise or a reduction, it's the perfect time to reach out to see how things are going.
One of the lightbulb moments for the launch of simplyaskit was too many borrowers said they couldn’t remember who helped set up their loans, their broker hadn’t been in touch since the loan settled, their bank manager had moved elsewhere and they just didn't know who to contact.
Any industry expert should want to stand out from the crowd, we should all want to our service levels and customer experiences to be such our customers remember us.
I recently read an article where a question was posed about who pays the salaries of the employees of a business. Most people suggested it was the employer, the leading business person suggested a rethink and simply stated: "it's the customer who pays the salaries."
It’s another lightbulb moment and why Atlassian has one of its core values as Don’t #@!% the Customer.
As borrowers, mortgage and finance brokers we should all be proactive to ensure we not only know the interest rate on our own home loan, our customer’s home loans but also make the call to see if we can get a better rate.