GEMMA ACTON: Doing a little bit of research could save you thousands of dollars on household utility bills

Last week I picked up the phone, called a comparison site and saved around $470 for the coming year through switching my electricity and gas providers.

It took less than five minutes, brought welcome relief and prodded me into remembering to do this more often.

In other words, an extremely well-rewarded use of my five minutes. And yet, consumers do not switch service providers often enough — particularly on the items where it can make a real difference to household finances.

A recent survey by the home loan platform Lendi showed one in four borrowers wait until the Reserve Bank moves before attempting to refinance.

Judging by Michele Bullock’s comments last week, they could be waiting for quite some time. In the meantime, that’s potentially hundreds or thousands of dollars left on the table with Lendi CEO David Hyman ruing homeowners’ inaction, saying “Sometimes, there’s a feeling the process is difficult, there’s a feeling their financials will be gone over with a fine tooth comb.”

According to Hyman, a spate of innovations in recent years means the refinancing process today is both far less invasive and administration-heavy than it ever used to be — and likely a vast improvement on what many borrowers remember.

Yet he also acknowledges that in periods of uncertainty, homeowners might not know how to act. Indeed it is hard to push confidently ahead with a major financial decision if you’re confused about the economic outlook — and the outlook right now is nothing if not confusing, with economists not even aligned on the direction of the next RBA moves, much less their timing or magnitude.

Fixed-rate loans started the year at a laughably high level with competition driving many offers down in recent months. The major four lenders are deliberately sitting out the downward climb, allowing the next rung of lenders to consolidate their growing stakes in the home loan market and other smaller rivals to snap up some new customers.

If you’re considering refinancing, be sure to look beyond the Big Four. Earlier this year, the average three-year fixed rate slipped below the average variable rate for the first time in a long while, with average two-year rates now not much higher.

These movements have reignited chatter about whether the time has come to go against the grain and fix your mortgage. As it stands, the proportion of borrowers choosing a fixed home loan currently flounders at an all-time low of 1.4 per cent.

Having dug into the numbers, unless you are someone who desperately craves the certainty of a fixed payment schedule, I feel the case for fixing now is very weak. And I say that as someone who is currently happily locked into a four-year home loan and has no inherent preference for either type of mortgage.

At the time of writing, the lowest available fixed rate was Australian Mutual’s three-year 5.48 per cent offer — just over a quarter of a per cent below the lowest available variable rate offered by Abal Bank of 5.75 per cent.

In other words, all we need is one rate cut in the next three years to put these options neck-and-neck, but only the variable option will be positioned for further downward falls.

While economists and traders alike have been steadily pushing out their predictions for when the Reserve Bank will first cut interest rates, the vast majority still believe it’ll be within the next year, with the potential for multiple rate cuts within the next three years.

When the cuts do start, not only will variable rates start falling but fixed rates will continue their descent.

In the meantime, there’s no reason to expect the recent spike in competition between lenders to taper off.

Sally Tindall at the comparison site Rate City observes: “Since the start of this year we have seen a flurry of fixed rate cuts but they’ve come from dizzying heights and I do believe they have further to fall.”

According to Rate City, more than half of the lenders in their database are now advertising a fixed rate that’s lower than their variable rate offer. This shows an increasing desire on the part of lenders to lock in borrowers at these levels, despite a recent burst of enthusiasm for the (plausible) contention that the Reserve Bank still has one more rate hike left in the tank.

Many of us are hunting around for ways to save at the moment. If you haven’t called your lender or broker in a while to see if you can secure a better deal on your home loan, pick up the phone right now. And if you’re seduced by slightly lower rates on a medium-term fixed rate loan, stop and ask yourself if you really think the Reserve Bank is going to sit on its hands for that many years.