RateCity.com.au
powering smart financial decisions
RateCity.com.au

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
LenderRate
Reduce Home Loans

1.77%

Homestar Finance/Pacific Mortgage Group

1.79%

Freedom Lend

1.84%

1 year fixed
LenderRate
Greater Bank

1.69%

UBank/RACQ Bank/Hume Bank

1.79%

TicToc Home Loans/Well Home Loans/86 400

1.84%

2 year fixed
LenderRate
Greater Bank/P&N Bank/ Homestar Finance

1.79%

ING

1.84%

QBank

1.87%

3 year fixed
LenderRate
ING/MOVE Bank

1.89%

Credit Union SA/ Hume Bank

1.94%

UBank/BankVic/Bank Australia

1.95%

4 year fixed
LenderRate
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
LenderRate
Freedom Lend

2.27%

BankVic

2.39%

Bank Australia

2.40%

 Lowest big four bank owner-occupier home loan rates

CBAWestpacNAB 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. 

Did you find this helpful? Why not share this news?

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

Advertisement

RateCity

Related news