Aussie borrowers hate fees

Ability to make extra repayments and offset accounts among most-wanted mortgage features

Aussie borrowers hate fees
Ability to make extra repayments and offset accounts among most-wanted mortgage features

Other than interest rates, fees are the most important feature for Aussie consumers when considering a home loan, according to a new survey.

Online comparison website Finder.com.au surveyed 1,286 homeowners on which feature they considered most important, with 36% selecting fees.

Ability to make extra repayments was the second most-selected feature, on 28%, followed by the inclusion of an offset account, at 18%.

“When reviewing home loan options, fees trump nearly all else,” said Finder’s money expert Bennie Hassan. “However, it appears Australians are becoming savvier when understanding the value of making additional repayments and using a linked offset accounts.” 

13% of respondents selected ‘redraw facility’ and just 5% named portability as the most important feature.  

Away from the basic mortgage

Whilst interest rate changes have dominated the headlines, there are several signs Australians are moving away from bare-basics home loans.

In October, Aussie relaunched two new white label products funded by Macquarie Bank. The Aussie IQ Offset home loan allowed multiple splits and offset accounts and could be linked to Aussie branded transaction accounts, which David Smith, general manager of product strategy, termed the “very latest in home loans”.

Home loans with features are also becoming cheaper. An analysis by comparison website CANSTAR in October found that half of loans with a rate under 4% included offset accounts. Almost all of the loans under 4% included a redraw facility and all had the ability to make extra repayments.  

Brokers' favourite products

In MPA’s Brokers on Banks and Brokers on Non-Banks reports, respondents were asked to name their top product of the year.

The top bank product of the year, Westpac’s Flexi First Option Home Loan, is marketed as a low-rate basic product. Extra repayments are permitted but an offset account is not included.

One broker praised the product’s “fantastic initial rate – revert rate is reasonably high, but we cross that bridge when the time comes. No upfront fee, no ongoing fee. Basic, simple home loan.” 

Liberty’s Star was the top non-bank product and included a range of features including offset, redraws and additional repayments. According to one broker “for clients at a high LVR being able to borrow up to 100% of the value of the property essentially is a great niche”.