The Advertiser - Real Estate

How to ask for a better rate

- Anthony Keane Personal finance writer

What a difference a decade makes. It’s crazy to think that just over 10 years ago Australian­s were paying home loan interest rates near 8 per cent. In late 2010 both variable and fixed mortgage rates were 4-5 per cent more expensive than today, according to Reserve Bank of Australia data.

Then came years of low inflation and sluggish economic growth, topped off with a global pandemic and recession. Mix them together and voila! You have record-low rates around 2 and 3 per cent and the RBA saying they will stay low for several years.

In dollar terms, the difference is huge. On a $300,000 mortgage most borrowers are paying almost $900 a month less than they did a decade ago, while the savings on a larger $500,000 loan are almost $1500 a month.

But borrowers can still go lower. Many lenders charge rates – typically standard variable rates – between 3 per cent and 4 per cent while others are under 2 per cent.

The key to getting a better deal is negotiatio­n, but you don’t need to be a master haggler. Just follow these steps:


Don’t accept the rate you currently pay is the best you can get. Your bank is not going to contact you to tell you they want to charge you less on your mortgage. And before you contact them, you’ll need to know exactly what you are paying and the other features of your loan. Check their latest correspond­ence, statement or your account online.


Lenders are fighting fiercely for customers at the moment, and it’s easier than ever to see their rates. New borrowers often get better deals than existing customers. These days there’s little reward for loyalty.

Australia has plenty of comparison websites showing a range of loan products, but be sure to visit a few because each site doesn’t show every available lender.

You can also visit individual lenders’ websites or make a few calls.


Often it takes just one telephone call to your existing lender to get a lower rate, as long as you’ve done your homework and know what competitor­s are offering.

This is not really haggling. You’re simply explaining what deal you can get elsewhere, and politely informing them you’re tempted to take up the rival offer.

Banks have customer retention teams that swing into action if they think you’re going to leave. Savvy borrowers call their banks at least once or twice a year.


If bargaining isn’t your thing, or researchin­g mortgages isn’t your thing, but saving money is your thing, consider contacting a mortgage broker. They live and breathe this stuff, can learn your situation then show you a range of options.


Sometimes lenders won’t budge on their home loan rate, so be prepared to walk if you can get a better deal elsewhere and there’s no hefty break fees. It’s usually easy to switch, and don’t worry if that means swapping over a pile of direct debits – your new lender should help with this process.

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