Some lenders cut home loan rates while others hike – what’s your bank doing?
Key takeaways
- Some lenders are cutting rates outside the RBA cycle to win new refinance customers, while others pull back their cheapest deals.
- This week Homestar Finance cut some refinance rates by 5 to 10 basis points, following Macquarie, Suncorp and over 20 other banks who also reduced rates
- If your mortgage rate starts with a 6 (or higher), now is a good time to shop around for a better deal.
Australian mortgage holders who are waiting for the Reserve Bank to make their next move could be missing a trick.
While interest rate headlines have focused on whether the RBA will raise or hold the cash rate, lenders are increasingly making their own moves.
Some are cutting rates to attract new customers.
Others are lifting their cheapest rates and pulling ultra-low deals from the market: several banks offered 5.69% rates until the last couple of weeks.
The home loan market is becoming a bit of a mixed bag, but there's one clear winner: new customers.
The catch? These rates are aimed at new customers
It's becoming a familiar theme in the mortgage market: lenders are competing hard for new business by offering lower rates for newcomers.
Meanwhile, many existing customers continue paying more.
The silver lining is that anyone who is in a position to refinance stands to benefit.
→ Over two dozen lenders have reduced their official variable rates over the last 2 months, usually by between 5 and 15 basis points.
→ Macquarie dropped some rates by 5 basis points, Bendigo Bank by 15 basis points, and Homestar Finance – the latest lender to cut selected home loan rates independent of the RBA – dropped by 5 to 10 basis points.
Refinance an eligible Unloan home loan via Finder & get a $1,000 Visa gift card
This means your lender could be sitting on a rate cut for new customers that they've decided not to offer you as an existing loan holder.
Or, a competitor could be offering a much better deal – but they're not going to come knocking on your door to tell you about it.
If you have a mortgage, here's what to do:
Check the rate you're actually paying
Start with your current interest rate. If your rate starts with a 6 or, worse, a 7, you can probably get a better deal.
Find out what new customers can get from your bank
Your lender may be advertising a lower rate to new customers than the one you're paying.
Compare before the cheapest deals disappear
The lowest end of the market now sits at around 5.79%, but there's also application fees, ongoing fees and refinance costs to factor in. Also factor in any cashback offers.
Don't focus on the interest rate alone
Think about whether the loan suits the way you manage your money. For example, if you keep a large amount in an offset account, a loan with a slightly higher interest rate but a strong offset feature could work out better for you.
Give your current lender one chance to compete
Once you've found a better deal, call your lender before making the switch. Tell them what you've been offered and ask them to match it.
If your bank won't reward your loyalty, there's no reason to keep rewarding theirs.
Don't sit back and wait for the next RBA meeting to decide whether your mortgage is worth reviewing. Compare the best deals today.
Sources
Ask a question