According to the latest ING Direct Financial Wellbeing Index, nearly one in two homeowners is unhappy with their mortgage. Australians are ready to leave their current lenders but are unsure if it is worth their trouble largely due to three main perceived barriers.
Examining the Index, Quick Assist Lending can recite the key points for QTR 4 of 2010 (surveyed in Jan 2011) to be:
* Only 46% of home owners are satisfied with their home loan.
* One in three home owners (31%) is thinking of refinancing.
* For 65% of home owners, exit fees are the main deterrent to refinancing.
* Almost half (46%) say the paperwork involved makes refinancing too hard.
* 30% say there's not enough difference between lenders to make a switch worthwhile.
The Index also looks at and rates the comfort levels across six key areas, credit card, mortgage debt, savings, investments, household income and the ability to pay bills. These areas are ranked on a scale of 1 to 7, 1 being very uncomfortable to 7 being very comfortable. All areas remained constant for QTR 4 of 2010 compared to QTR 3 with only a slight drop in comfort level of mortgage debt.
So with 31% of homeowners thinking of refinancing, what makes them so dissatisfied? It seems they are largely dissatisfied due to a series of interest rate rises announced by the Reserve Bank of Australia and in particular dissatisfied with those bank-led increases during 2010.
And why is it that they do not take action? The most overwhelming reason is exit fees. Is it really worth it, would they be any better off after paying those exit fees and enduring all that time consuming paperwork when there is so little difference between the lenders anyway?
The sad part for the homeowner is that many of the findings are "perceptions" rather than "realities" and that a conversation with a mortgage broker could steer them through points of concern - such as exit fees - that should not necessarily be barriers to switching.
The perception that all lenders are the same has been reinforced by the so called Big Four offering similar products and interest rates. If homeowners are prepared to consider other lenders outside the Big Four, they will be pleasantly surprised to find there are in fact many lenders in the market with very competitive products and interest rates. Moreover, the smaller less known lenders often can be much more flexible in their approach.
With the assistance of an Approved MFAA Mortgage Broker much of the leg work can be removed and brokers are well prepared to help consumers that are concerned about their current lender and are not sure what to do.
Mr. Don Koch, CEO of ING DIRECT said, "The fact is that home loans vary widely and homeowners can potentially save a lot of money. Switching is easier than people think and increasingly a number of lenders are removing exit fees altogether"