Rate cut means it’s time to talk tough

MORTGAGE customers should be using the latest rate cut as a prompt to closely review the fees and charges on their loans.

Almost every lender on the market has declared they would pass on the 0.25 percentage point cut in full following the Reserve Bank of Australia’s decision to cut the cash rate last week.

This means many rates would fall below the 3 per cent mark and provide customers with never-before-seen deals on their debt.

Aussie’s chief executive officer James Symond said

Key questions to ask your bank or broker How much are the fees and charges?

What interest rate am I paying?

Am I on the right loan product?

What will be the savings if I switch lenders?

Am I entitled to cashback deals or special offers?

If using a broker: How many lenders do you represent?

competition in the market had intensified and lenders were “red hot for good customers”.

“There are lenders who are out there absolutely fighting for business and good customers with a good history and good

record,” he said. Mr Symond said borrowers “have to work out whether the juice is worth the squeeze”, by going through the process of hunting for a cheaper deal.

He said about 30 per cent of loans through Aussie’s channels were refinances of existing mortgages.

“Call the bank and ask for a better deal, and if they won’t give you a better deal, call a broker,” Mr Symond said.

“For good customers with a good history, with the latest rate cuts in mind, the rate should have a two in front for a residential home loan.

“Certainly for a home loan for virtually everyone with investment loans it should have a three in front of it.”

The latest 0.25 percentage point rate cut would save a borrower with a 30-year $500,000 mortgage $70 per month, $2240 a year and about $25,300 over the life of the loan. ANZ’S head of home loans, John Campbell, said now was definitely a good time to talk to your bank.

“There are banks out there at the moment looking to attract business and cashback is quite pronounced to have customers switch their loans,” he said.

“Ask if you are on a good rate and whether you are set up to make the most of your loan – are you making the most of an offset or redraw account?” Many banks also offer packaged deals which roll multiple products – such as a transaction account, credit card and home loan – into one and provide savings.

But be sure to check that each individual product is right for you, because it often could be better to cherry pick products from multiple banks. moneysaverhq.com.au