Time to haggle your home loan: Borrowers unaware they could negotiate

50% of borrowers haven’t considered calling their lender to ask for a lower interest rate

13 March 2023

  • A further 17% didn’t know they could negotiate variable interest rates with lender 
  • One-in-five mortgage holders failed to secure a lower rate after calling to negotiate
  • Refinancing to the lowest rate in the Mozo database (4.29) would save borrowers $5,148 a year 
  • Auswide, BCU, Qudos, RACQ and Unloan have been awarded best Low Cost Home Loan in the annual Mozo Expert Choice Awards

New research from comparison site Mozo has found that alarmingly 50 percent of mortgage holders on variable rate loans have not considered contacting their lender to ask for a lower interest rate. 

The finding comes despite interest rate hikes dominating the headlines for several months, following the RBA’s decision to increase the cash rate by 325 basis points in the last nine months. 

“It’s shocking to think that so many Aussies have just bunkered down and accepted higher repayments rather than getting on the phone and negotiating a better deal,” said Claire Frawley, Personal Finance Expert at Mozo. 

“If you’ve been a loyal home loan customer, it is worth a shot to see what your lender will do. If they don’t come to the party, then you can start to look around at other possible options.” 

Before entering negotiations, it’s important for borrowers to set the scene by doing their own research and knowing what other banks or lenders are offering for someone in their current financial situation. Prior to the bank discussion, Mozo’s experts also recommend that mortgage holders get an understanding of their property’s value from a local real estate agent so that they know how much equity they have as this can also help with negotiations.

“Despite higher interest rates there is still fierce competition for new customers. If you’ve had your home for several years, you could have good equity built up and several lenders now offer lower interest rates to borrowers with higher equity which you might qualify for and this can save you thousands,” added Frawley.   

Refinancing a $500,000 mortgage from the average variable rate (5.80%) to the lowest in the Mozo database (4.29%), could save an owner occupier $5,148 a year. 

As part of its recent analysis for the 2023 Mozo Experts Choice Home Loan Awards, Mozo’s experts compared over 325 home loans to find Australia’s best home loans. Bendigo Bank was named Home Lender Bank of the Year, Unloan was named Best New Home Loan and among the winners in the low cost category were Auswide, BCU, Qudos and RACQ.

“As the Mozo Experts Choice Awards winners list demonstrates, if lower home loan repayments is a top priority then borrowers need to look outside of the big 4 banks as this is where they’ll likely find the best value home loans.”

For further information on this year’s award winners, visit: Mozo Experts Choice Home Loan Awards.

Notes: $500,000 owner occupier home loan with monthly principal & interest repayments over 25 years and LVR of 80%. Starting variable rate (5.80%) to the lowest in the Mozo database (4.29%)