Home loan discounts are still available despite stricter lending conditions
Wednesday 31 October 2018
When it comes to the search for a great home loan rate, there are three types of Aussies: hopeful first home buyers, investors looking to buy their next property and current homeowners trying to refinance to a better deal.
But thanks to lenders locking down their loan books and tightening lending criteria, it’s safe to say that all these Aussies may be struggling to figure out their next move.
However, according to a recent Mozo mystery shop, getting a better home loan deal may be as simple as asking for it, with rate discounts of up to 0.95% possible with the big banks - a 0.13% increase from last year.
By haggling on their mortgage rate, first home buyers could save $60,000 over the life of their loan, a $15,000 savings increase from 2017. Those looking to refinance could slash a whopping $94,000 off their loan, while investors could keep an extra $47,000 in their pockets.
Negotiating with the big 4
Mozo found that CommBank was the ‘easiest’ big bank to negotiate with and offered the most competitive discounts across the board for first home buyers, investors and refinancers.
ANZ were open to handing out discounts, however, they were not as sizeable as those offered by CBA. And although NAB didn’t offer any discounts, it’s worth noting it did have the most competitive rates to begin with.
Westpac was the hardest bank to strike a deal with, which was the case in previous Mozo home loan mystery shops as well. The bank asked our Mozo mystery shoppers to ‘put in an application’ and were only willing to price match with other banks if they ‘had it in writing’.
For first home buyers, discounts from 4.72% to 3.77% were on offer, resulting in average savings of up to $2,001 per year on a $300,000 loan.
Refinancers were able to snag discounts from 4.62% to 3.72%, equating to $3,145 in savings each year on a $500,00 loan.
And investors could negotiate discounts of 5.54% to 4.59%, a total discount of $9,500 every year on a $1,000,000 interest only loan.
“The banks have more leverage to reduce their standard variable rate given they’ve recently hiked rates, so it pays to push hard when you’re shopping for a loan. Given tightened lending criteria, there is a smaller pool of customers shopping for home loans, and the banks are vying for that business,” said Mozo Property Expert, Steve Jovcevski.
“If you’re in the market for a home loan, it pays to haggle. Our mystery home loan shop found that two of the big four banks, Commonwealth Bank and ANZ, were prepared to move on interest rates when pushed, even for investors.”
Along with decent discounts, some banks were also willing to provide other incentives to customers, including cash back and frequent flyer points.
So for the Aussie borrowers keen to give haggling a go, Jovcevski has a reminder about the importance of thinking long term.
“When it comes to driving your home loan down, it’s important to look at the big picture. Home loan hagglers should always focus on the initial rate offered as well as discount received. Then you’ll get a clearer picture of the best lender for you and can work to drive the banks to their lowest deal,” says Jovcevski.
“If you push hard for a better home loan deal, it’s the gift that keeps on giving, resulting in long-term savings, with thousands knocked off your mortgage.”
So before you approach your lender to ask for a better rate, you’re going to have to do some shopping around to make sure you start off on the right foot. Our home loan comparison tool compares a range of home loan offers, helping you find the right loan.