As we all know in 2023, we had 5 interest rate rises. It is hard to believe that in April 2022, we were receiving rates of 1.97% p.a for our clients! As of writing this blog (Dec 2023), the cash-rate is sitting at 4.35% compared to 0.10% in April 2022. So, the RBA has increased rates by 4.25%!
You would think, okay, if we were receiving a 1.97% p.a interest rate in 2022, and apply the 4.35% of rate increases, the best rate in town is 6.32% p.a. No! Because whilst lenders have been increasing their variable rates in line with the RBA for existing customers, they have also been providing greater discounts for new customers. That same lender is offering 5.99% p.a for a brand-new customer! That is a saving of over 0.33%!
So, is the solution just to keep refinancing? No! Lenders are offering similar rates for their existing customers; however, you simply need to ask! Lenders are also offering, in some occasion’s a cashback incentive for you to stick with them! In some occasions, yes, you may need to refinance to receive a better interest rate however, our preference is always for you to stick with your existing lender. We know changing direct debits, changing banks is something you rather avoid, but sometimes, it is necessary.
Real example –A first home buyer of ours has a $700,000 loan with a 2-year fixed rate at 1.97% p.a that is due to expire in the coming months. The customer received a letter from their existing provider advising that their rate would increase to 8.33% p.a at the expiry of the fixed rate period. The customer was panicking. We were able to negotiate this down to 6.13% p.a.! This is a saving of just under 2% p.a. The customer then wanted to refinance to another lender who offered a 5.99% p.a. rate. This has saved the customer lots of $$$.
Can you negotiate on our behalf? On most occasions, yes, we can negotiate with a lender on your behalf. Every lender has a slightly different loan retention process.
Our office is here to help you negotiate with your existing lender.
