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- Don’t ask, don’t get: 3 out of 4 mortgage holders who asked for a rate cut, got one
Don’t ask, don’t get: 3 out of 4 mortgage holders who asked for a rate cut, got one
Almost three-quarters of variable borrowers who asked for a rate cut, got one, a new survey has found.
In a RateCity.com.au survey of over 1,000 mortgage holders, of those on a variable rate, 52 per cent haggled with their bank for a lower rate. Over 73 per cent of these people were successful in getting at least one rate cut.
A rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years. This is based on a $500,000 loan balance with 25 years remaining.
ASKING FOR A RATE CUT – HOW MUCH CAN YOU SAVE?
RBA average existing customer variable rate: 3.08%
Savings from a 0.25% rate cut
| $500K loan | $1M loan | |
| After 1 year | $1,241 | $2,481 |
| After 3 years | $3,656 | $7,312 |
Savings from a 0.50% rate cut
| $500K loan | $1M loan | |
| After 1 year | $2,480 | $4,961 |
| After 3 years | $7,304 | $14,607 |
Source: RateCity.com.au. Calculations are based on the RBA’s average existing owner-occupier variable rate of 3.08%. It assumes the rate cut is for the life of the loan and the rate remains steady over the following three years.
While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market.
RateCity.com.au home loan database analysis:
- 49 lenders have cut at least one variable rate in the past two months.
- 10 lenders have hiked variable rates in that time.
- The vast majority of variable rate cuts are reserved for new customers, not existing ones.
RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate tomorrow, one phone call could potentially save the average variable rate mortgage holder thousands.
“Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,” she said.
“Before you call, check what rate your bank is giving new customers for the same home loan, but also find out what other lenders have on offer.
“If you are paying significantly more than a new customer, pick up the phone and ask your bank ‘why?’.
“If you have a good track record of paying down your debt, and the bank thinks you might switch to a more competitive lender, they’re likely to play ball.
“A lot of people think a handful of basis points won’t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years,” she said.
Lowest available home loan rates on RateCity.com.au
| Variable | |
| Lender | Rate |
| Reduce Home Loans | 1.77% |
| Homestar Finance/Pacific Mortgage Group | 1.79% |
| Freedom Lend | 1.84% |
| 1 year fixed | |
| Lender | Rate |
| Greater Bank | 1.69% |
| UBank/RACQ Bank/Hume Bank | 1.79% |
| TicToc Home Loans/Well Home Loans/86 400 | 1.84% |
| 2 year fixed | |
| Lender | Rate |
| Greater Bank/P&N Bank/ Homestar Finance | 1.79% |
| ING | 1.84% |
| QBank | 1.87% |
| 3 year fixed | |
| Lender | Rate |
| ING/MOVE Bank | 1.89% |
| Credit Union SA/ Hume Bank | 1.94% |
| UBank/BankVic/Bank Australia | 1.95% |
| 4 year fixed | |
| Lender | Rate |
| TMB/UniBank/Health Professional Bank/ Firefighters Mutual Bank | 2.14% |
| Illawarra Credit Union | 2.15% |
| Westpac/St.George/BoM/P&N Bank | 2.19% |
| 5 year fixed | |
| Lender | Rate |
| Freedom Lend | 2.27% |
| BankVic | 2.39% |
| Bank Australia | 2.40% |
Lowest big four bank owner-occupier home loan rates
| CBA | Westpac | NAB | ANZ | |
| 1 yr fixed | 2.09% | 1.99% | 2.09% | 2.04% |
| 2 yr fixed | 1.94% | 1.89% | 1.99% | 1.94% |
| 3 yr fixed | 2.19% | 1.98% | 2.08% | 2.04% |
| 4 yr fixed | 2.24% | 2.19% | 2.24% | 2.49% |
| 5 yr fixed | 2.99% | 2.49% | 2.49% | 2.69% |
| Variable | 2.69% | 2.19% for 2 yrs then 2.69% | 2.69% | 2.72% |
Source: RateCity.com.au. Note: Westpac's rates are for a loan to value ratio of up to 70%.
RateCity survey results summary
| Number of people who have successfully haggled | 73% |
| Number of people who have haggled | 52% |
Note: some people asked for a rate cut more than once, the results are based on variable rate customers.
Disclaimer
This article is over two years old, last updated on August 2, 2021. While RateCity makes best efforts to update every important article regularly, the information in this piece may not be as relevant as it once was. Alternatively, please consider checking recent home loans articles.
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Product database updated 25 Dec, 2024
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