How to win the bank home loan rate war

As home loan rates plunge to new lows, you may be wondering how you can win the bank rate war. The answer may be as simple as picking up the phone.

Last week we saw ANZ cut its fixed rates to as low as 2.68% per cent. This was in response to CBA slashing its fixed rates by up to 50 basis points just the week before.

Both of these changes saw even more loans fall under the 3 per cent bracket. This means home loans rates starting with a 2 are becoming more and more accessible for homeowners and investors.

Are you in a position to haggle?

Before you try to nab a lower home loan rate, you’ll want to position yourself as a more ‘ideal’ borrower.

Put simply, this is a mortgage holder who:

• Has paid off 20 per cent of the property value or more
• Is employed full time
• Lives in the property 
• Is paying principal and interest

If you only tick one or two of these boxes (for example, because you’re an investor), you can still fight for a lower rate. Just keep in mind that some lenders save the lowest home loan rates for borrowers with LVRs of 80 or below.

Talk your way to a lower rate

If you’re currently paying off your mortgage, an interest rate cut could be waiting for you if you pick up the phone and ask for one.

First, you can arm yourself with as much ammunition as possible:

1. Check what rate your bank is offering new customers, as it’s often more competitive than existing customer rates.
2. Use a comparison table to see what other banks are offering customers.

Next, you can call up your home loan provider, let them know you want them to lower your rate, and present your research by saying:

• You are an ideal borrower for one or more reasons listed above.
• You have been a loyal customer for however many years and it’s unfair new customers are getting lower rates. Here is where you provide some examples.
• You know competitors are charging lower rates for similar loans (provide examples) and you’re considering switching.

To switch or not to switch

If your bank is unwilling to budge, or if you believe another lender is actually a better option, the time may have come to consider refinancing. After all, you have a list of lower rate lenders at your disposal now.

Keep in mind that there are fees associated with refinancing. These can include upfront fees, break fees for fixed loans, and lender’s mortgage insurance if you’ve not paid off 20 per cent of the loan.

However, the benefit of refinancing to a lower rate loan is that your mortgage repayments may reduce, saving you money in the long run. This means you could eventually break even on these fees, sometimes in a matter of months.

What are the lowest home loan rates?

There are currently 485 loans starting with a 2 in the RateCity database.

Here are some examples of home loan rates starting with a 2 that you can either use as ammunition in your negotiations or consider refinancing to:

Variable owner-occupier loans

Note: Data based on lowest variable owner-occupier loans paying principal and interest on $400k mortgage over 30 years. Data accurate as at 28.20.2020.

Variable investor loans

Note: Data based on lowest variable investor loans paying principal and interest on $400k mortgage over 30 years. Data accurate as at 28.20.2020.

2-year fixed owner-occupier loans

Note: Data based on lowest 2-year fixed owner-occupier loans paying principal and interest on $400k mortgage over 30 years. Data accurate as at 28.20.2020.

2-year fixed investor loans

Note: Data based on lowest 2-year fixed investor loans paying principal and interest on $400k mortgage over 30 years. Data accurate as at 28.20.2020.

Compare home loans in Australia