Despite the Reserve Bank of Australia’s prudent pause in interest rates since July, recent research has revealed many experts are expecting another rate rise this year.
Finder head of consumer research Graham Cook says that of the experts who weighed in, 48 per cent believe the cash rate has peaked at 4.10 per cent. However, 42 per cent believe the rate will peak at either 4.35 per cent or 4.60 per cent.
And with 40 per cent of fixed-rate loans outstanding in early 2022 expiring by the end of 2023 and a further 20 per cent by the end of 2024, leading broker Louisa Sanghera says existing borrowers will be doing their homework to secure the best home loan rates.
“This equates to 590,000 loan facilities in 2022, 880,000 in 2023 and 450,000 in 2024, according to the Reserve Bank of Australia,” Ms Sanghera says.
“The bulk of fixed-rate loans are expiring in the second half of this year, with many existing borrowers having to renegotiate with their current lenders because they are unable to refinance.
“The rapid increase in interest rates since May last year means many existing borrowers are stuck with their current lenders because they simply don’t qualify to refinance elsewhere at present.
“However, that doesn’t mean that borrowers need to just accept any old ‘offer’ from their lender or – worse still – simply allow their home loans to roll over to the advertised variable rates.
“Rather, by being proactive and undertaking some simple research, existing borrowers can give themselves a better chance of securing a much better home loan rate.”
FIVE TOP strategies for home loan negotiation
- Find the best rate on offer – Ms Sanghera says borrowers should research the best home loan rates currently on offer in the market and use this research as leverage with their current lenders. “Find the best rate in the market, then take that rate to your bank and ask them to beat it,” she says.
- Speak to the retention team – Ms Sanghera says borrowers often make the mistake of talking to the wrong people when renegotiating their home loans. “Always ask for the bank’s retention team directly as they have the best rates, rather than someone who may just be in the home loan call centre,” she says.
- Don’t give up – Ms Sanghera says too many borrowers are passive when it comes to their home loans. Instead, they should be proactive whenever possible. “If the rate they offer you is still underwhelming, don’t give up, and repeat the same process every six months,” she says.
- Name drop your LVR – Ms Sanghera says many existing borrowers have built up significant equity in their homes over recent years, which they can use to their advantage in negotiations. “Lower loan-to-value ratios, or LVRs, do carry lower rates with lenders. So, if your property has gone up in value, you may qualify for a cheaper rate. So, make sure you know your current LVR before calling,” she says.
- Ask for fee waiver – Ms Sanghera says sometimes banks simply won’t offer a lower rate, but there are still ways for borrowers to save money. “If they say they can’t lower the rate, then ask if they can waive the annual fee instead.”
