By now you’ve probably heard that the Reserve Bank has once again cut the official cash rate, this time to an historic low of 0.10% - and if you haven’t where the heck have you been?!

But that doesn’t mean your lender will just automatically pass on the rate cut to you. Instead, most lenders are choosing to pass on the cut to fixed rate home loans, which suggests most mortgage-holders can only receive the rate cut by refinancing to these fixed rates.

This goes against previous cash rate changes when most lenders diligently passed on some or all of the cut to their existing variable rate customers.

Buying a home or looking to refinance? The table below features home loans with some of the lowest interest rates on the market for owner occupiers.

Update resultsUpdate
LenderHome LoanInterest Rate Comparison Rate* Monthly Repayment Repayment type Rate Type Offset Redraw Ongoing Fees Upfront Fees LVR Lump Sum Repayment Additional Repayments Split Loan Option TagsFeaturesLinkCompare
6.04% p.a.
6.06% p.a.
$2,408
Principal & Interest
Variable
$0
$530
90%
Featured 4.6 Star Customer Ratings
  • No monthly or ongoing fees
  • Unlimited free redraw
  • No application fee
5.99% p.a.
5.90% p.a.
$2,396
Principal & Interest
Variable
$0
$0
80%
Featured Apply In Minutes
  • No application or ongoing fees. Annual rate discount
  • Unlimited redraws & additional repayments. LVR <80%
  • A low-rate variable home loan from a 100% online lender. Backed by the Commonwealth Bank.
6.14% p.a.
6.16% p.a.
$2,434
Principal & Interest
Variable
$0
$250
60%
Featured Unlimited Redraws
  • No annual fees - None!
  • Get fast pre-approval
  • Unlimited additional repayments free of charge
  • Redraw freely - Access your additional payments when you need them
  • Home loan specialists available today
Important Information and Comparison Rate Warning

Base criteria of: a $400,000 loan amount, variable, fixed, principal and interest (P&I) home loans with an LVR (loan-to-value) ratio of at least 80%. However, the ‘Compare Home Loans’ table allows for calculations to be made on variables as selected and input by the user. Some products will be marked as promoted, featured or sponsored and may appear prominently in the tables regardless of their attributes. All products will list the LVR with the product and rate which are clearly published on the product provider’s website. Monthly repayments, once the base criteria are altered by the user, will be based on the selected products’ advertised rates and determined by the loan amount, repayment type, loan term and LVR as input by the user/you. *The Comparison rate is based on a $150,000 loan over 25 years. Warning: this comparison rate is true only for this example and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. Rates correct as of . View disclaimer.

In his speech after the announcement of the rate cut, Reserve Bank governor Philip Lowe urged borrowers to consider changing lenders if they haven’t received a rate cut.

"The best outcome would be for standard variable rates to be lowered but if that doesn't occur I'm confident there will be pass-through occurring through people renegotiating and switching... I encourage everybody to go to their bank and ask for a better deal," Dr Lowe said.

“If they don’t give it to you, switch to a bank that will.”

If it’s been a while since you reviewed your home loan interest rate, you’re probably paying too much. Negotiating with your bank can be intimidating for a lot of people so here’s a step by step guide on how to ask your lender for an interest rate reduction on your mortgage.

How to ask your lender for a home loan rate reduction:

Do your research and compare other lenders' rates

Before you even get on the phone, you should take a look at what rates other lenders are offering and what rate your current lender is offering new customers. By doing this, you can see how your current loan stacks up and use this information to haggle for a better interest rate.

When comparing interest rates, don’t forget to look at the comparison rate (the true cost of the loan once fees have been taken into account). Looks can be deceiving - sometimes what looks like a really attractive rate can have a very high comparison rate.

Financial comparison websites like this one make it easy to see what rates other lenders are offering. A number of lenders are now offering home loans with rates below 2% while these are all the lenders who have so far taken rates below 2% in the wake of the most recent RBA cut.

Using an online mortgage switching calculator can be a great way to visualise how much money you could save by getting a lower interest rate, and give you extra motivation to demand a better rate from your lender.

Mortgage Choice CEO Susan Mitchell says it’s important to stay on top of what’s happening in the market.

“That way, if your lender, or other lenders suddenly announce a big change to their home loan pricing or incentives to join them, you can check to see if you benefit from the changes,” Ms Mitchell told Savings.com.au.

“It’s also important to remember that if you’ve fixed part of your home loan interest rate, you may still be able to renegotiate the interest rate on the variable portion of your home loan.”

Ring up your bank

Now it’s time to psych yourself up to make that phone call!

Money expert Nicole Pedersen-McKinnon provided Savings.com.au with this handy script from her book, Get Mortgage Free Like Me, to use in your phone call:

“Hi again, look I’m a long-time mortgage customer and I saw in the paper that the big banks are giving secret loan discounts of up to 1 whole percentage point. That means I’ve overpaid a stack and I’m annoyed.”

[They’ll probably then say] “Sir/madam, you already receive our maximum published discount for your loan size: 0.5 percent.”

You: “But that’s not 0.8… I know that on $300,000 loans ANZ gives a discount of 0.8 percent, NAB gives 0.85 percent and Westpac gives 0.9 percent. I’ve also discovered I could be paying below 2 per cent at a smaller lender, which would save me a chunk every month."

[They may then say] “Your custom is very important to us, so we’ll give you an extra 0.4 percent off to match our nearest competitor’s 0.9 percent. And we’ll throw in a case of wine.”

But they probably won’t (on either front). It’s no bad thing for you either. While the discount CBA admits to for a $300,000 loan is 0.5 percent research reveals that size loan with the majors is enough to trigger a 1.25 percent discount – if you are armed with rival offers and negotiate hard.

The key to nailing the phone call is to sound confident and the best way to do that is to have done your research before you pick up the phone. Tell your lender you’ve been shopping around and that you can see there are better deals on the market (and give examples).

Ms Mitchell says one trick that can work is to tell your lender you’re going to see your broker if they won’t lower your rate.

“Letting them know you have a broker is important as lenders know that brokers have access to a wide range of lenders with very competitive rates.”

And if you’ve only recently taken out a home loan, Ms Pedersen-McKinnon says you can still ask for a rate reduction.

“After as few as six months you should feel at liberty to ask for a mortgage discount - sooner if you see that there is a competitor offering a better deal or if your institution fails to pass on a rate cut.”

As for how often you should ask for a rate reduction, Ms Mitchell says every six to twelve months if you’re on a variable interest rate.

“It’s also a good idea to stay on top of what’s happening in the market. That way, if your lender, or other lenders suddenly announce a big change to their home loan pricing or incentives to join them, you can check to see if you benefit from the changes,” Ms Mitchell said.

“It’s also important to remember that If you’ve fixed part of your home loan interest rate, you may still be able to renegotiate the interest rate on the variable portion of your home loan.”

It’s important to stay on top of your home loan repayments if you want an interest rate reduction.

“It will be very difficult to negotiate if you’re behind or on a repayment pause,” Ms Mitchell said.

Call their bluff

If your lender isn’t willing to budge at all, telling them you want to sign a mortgage discharge form will show them you’re serious about getting a better rate.

Signing a mortgage discharge form means the lender is removed from your home loan and happens when you either pay off the loan in full or when you refinance.

Ms Pedersen-McKinnon says anything that shows you’re serious will be an important negotiating tool.

”Plus you'd do far better to shift anyway. The current cheapest variable loan in the market is now 1.77 per cent. So a ditch and switch is likely the very best way to go.”

Just remember, if you tell your lender you’re prepared to sign a mortgage discharge form, you had better be prepared to act on it too.

Be prepared to walk

Your lender may be willing to lower your interest rate but if it’s not competitive with other rates on the market and you’re still not happy, consider making the switch to another lender.

But before you switch, make sure you consider all the pros and cons of refinancing like break costs if you’re on a fixed rate and any other fees that come with refinancing.

If you’re sure refinancing is the right move for you, here’s our guide on how to refinance your home loan.

Savings.com.au’s two cents

With interest rates plummeting to the lowest levels in history, there’s no reason why you should still be paying a high interest rate on your mortgage. 

Refinancing your mortgage could literally save you thousands, so if you’re not happy with your rate, do your research and ask your bank to step up or switch.

Photo by Karolina Grabowska from Pexels





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