Mortgage holders feeling the pinch after three consecutive interest rate hikes are being urged to push their lenders for the best possible deal. While banks were once eager to compete for market share, they are now prioritising profitability, making it harder to secure a rate reduction.
Angus Gilfillan, chief executive of broking group Finspo, advises borrowers to find their lender's 'edge of cliff' retention price—the best rate offered when a customer is about to leave. To trigger this, first secure a competitive rate from a rival lender, then submit a discharge form to your current bank. This often prompts a call from their retention team with their most competitive offer.
Before lodging a discharge form, consider organising a home valuation. If your property has increased in value, your equity will have risen, making you a more attractive borrower. For example, moving from 20% to 30% equity could secure a better rate.
While most lenders are not offering deep discounts like in 2023, some are still in growth mode, particularly smaller lenders. According to Canstar data, cash back offers for new customers range from $2,000 to $4,000, depending on loan size and conditions such as having at least 20% equity.
Sally Tindall, Canstar's data insights director, notes that many owner-occupiers are paying over 6% on variable rates, even before the latest quarter-point rise. She estimates a competitive rate will still start with a five after the hike, but borrowers may need to switch to a lesser-known lender.
