Statement with the Monetary Plan Container C Perform Individuals with Old Mortgages Spend Highest Interest levels?
To own varying-speed mortgages, elderly fund routinely have highest interest rates than simply the new loans, even for consumers with the same attributes. Thus current consumers who is able to re-finance that have a unique lender or negotiate a better deal with the existing lender can perform attract deals. Which container examines the fresh extent that individuals with earlier mortgage loans shell out higher rates of interest and you may considers the new drivers associated with.
Rates of interest try high into the older financing
The difference during the rates of interest between the brand new and an excellent variable-rate home loans expands toward age of the mortgage. Just below 50 % of most of the adjustable-rate home loans regarding Reserve Bank’s Securitisation Dataset have been originated five or maybe more years ago. Already, these types of financing are interested rates that’s as much as 40 basis points greater than the fresh new loans (Chart C.1). For a financial loan equilibrium off $250,000, which huge difference means an extra $1,000 of great interest repayments a year.