Six million homeowners could get a better mortgage
Up to 6 million Australians could save up to $40,000 over the life of an average 25-year mortgage, following the introduction of new laws by the Australian Government, according to consumer advocate group www.creditsimple.com.au.
The introduction of Comprehensive Credit Reporting (CCR) means Australian banks are about to load millions of records with the credit bureaux, and lenders will now be able to see the positive records of the country’s 6.4 million home owners for the first time.
www.creditsimple.com.au CEO David Scognamiglio said the introduction of millions of new consumer spending records will generally see credit scores improve.
“Until the introduction of CCR in 2014, banks could only judge how much to lend to home buyers based on their ‘negative’ credit score – for things like defaulting on their credit card – which gave an unclear picture on what they could actually afford to borrow.
“Good qualities like paying their credit card or car loan on time were never included, he said.
Registries like illion would now house the new data, allowing up to 90 percent of home-owners to qualify for better mortgage deals.
“Home-owners may be able to get up to 0.5% off their current mortgage rate once their positive credit history is included on their credit record.
“For the average $372,902 home loan, that works out to be a saving of $112 per month, or $40,000 over 25 years.
“Better data gets you better deals, with some of the lowest in the market now being offered at 3.2%. A lot of people have a 4 in front of their mortgage now, when they should see a 3, and in some cases even a 2.
“Until now, your bank has held all your positive credit or payment information. Under the new system, that information will be held by the credit bureau and shared with other lenders, encouraging new entrants into the market and breeding more competition,” he said.
Mr Scognamiglio noted the system would also help protect more vulnerable consumers as more data also helped the Banks know when not to lend.
“It is more important than ever to make sure you pay your loans on time – missed payments will make your score go down.
“A good score means you are a valuable commodity to a bank.
“Banks will see you are a great payer even if your history is with another bank. That’s a game changer, and will breed new competition into the market, which means rates will get better.
“You should get a better rate if you have a good score, and you should use it as an opportunity to get a better rate,” he concluded.
To obtain your free credit score and report, visit www.creditsimple.com.au
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