Old home loans costing Aussies 'thousands' by not switching

Australians with older home loans are missing out on thousands of dollars in savings, a new report has found.

The Australian Competition and Consumer Commission (ACCC) today submitted its final report into the Home Loan price inquiry.

It found that borrowers are potentially spending far more money than they need to by not seeking a lower rate from their existing lender or switching to a new lender.

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"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."

Many "older" home loans carry significantly higher interest rates, which have been slashed due to the unprecedented economic impact of COVID-19.

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"If you are someone with an older loan, you might be surprised to know that borrowers with new loans are likely walking into the very same lender you have your loan with and getting significantly lower interest rates," Mr Sims said.

The ACCC recommends new measures be brought in for banks that makes changing lenders — or seeking a new rate — easier.

"Existing lenders want to keep their borrowers, so have no incentive to make the discharge process quick or straightforward," Mr Sims said.

"We want it to be as easy as possible for borrowers to switch lenders, as it should be in all markets. Our recommendations are designed to make this process faster, less confusing and less frustrating."