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The phone call that could save you $6,792
The RBA is expected to leave the cash rate on hold at 0.75 per cent when it meets on Tuesday.
That hasn't stopped banks cutting rates. In the last week alone, eight lenders, including big four bank Westpac, have lowered variable rates for new customers.
This means it's an ideal time for loyal variable rate borrowers to pick up the phone and ask for a discount.
New research from RateCity.com.au shows a rate reduction of 0.10 per cent off the average $400,000 home loan could save a borrower $6,792 over 25 years.
Savings on a $400,000 home loan on the average rate of 3.76%
Rate | Rate cut | Savings 1 year | Savings 5 years | Savings 25 years |
3.75% | -0.01% | $27 | $136 | $681 |
3.71% | -0.05% | $136 | $680 | $3,401 |
3.66% | -0.10% | $272 | $1,358 | $6,792 |
3.61% | -0.15% | $407 | $2,034 | $10,171 |
3.51% | -0.25% | $676 | $3,379 | $16,896 |
Source: RateCity.com.au
Calculations are based on a $400,000 30-year variable home loan for owner-occupiers paying principal and interest at the average variable rate of 3.76% and reducing that rate accordingly.
Sally Tindall, research director at RateCity.com.au, said shaving just 0.01 per cent off your rate could save you hundreds over the life of your loan.
"Now is a great time to ask your bank for a better rate; especially if you haven't haggled recently.
"If your bank is handing out lower rates to new customers, you've got the perfect ammunition to negotiate.
"Banks often have a bag of tricks to fob you off, but stick to your guns and insist on a better deal.
"A lot of people think a handful of basis points won't make much of a difference, but it can really add up over the life of your loan.
"Don't throw away your hard-earned cash paying a high interest rate. One phone call to your bank could save you thousands," she said.
Lowest rates on a $400,000 home loan offered by Australia's large banks
Bank | Lowest variable |
CBA | 3.22% |
Westpac | 3.18% |
NAB | 3.20% |
ANZ | 3.24% |
Adelaide Bank | 3.14% |
AMP | 3.14% |
Bank of Melbourne | 2.94% |
Bank SA | 2.99% |
Bankwest | 3.29% |
Bendigo Bank | 3.14% |
BoQ | 3.29% |
CUA | 3.20% |
HSBC | 3.02% |
ING | 3.03% |
Macquarie | 3.09% |
ME Bank | 3.32% |
Newcastle Permanent | 3.19% |
People's Choice Credit Union | 3.08% |
St George | 2.94% |
Suncorp | 3.03% |
Source: RateCity.com.au
Notes: Above rates are for owner occupiers paying principal and interest. No LVR restrictions.
Disclaimer
This article is over two years old, last updated on November 1, 2019. 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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