Borrowers can negotiate rate cuts

8th February 2012

Borrowers are being encouraged to demand a rate cut from their lenders, despite the Reserve Bank's decision yesterday to keep the official cash rate unchanged at 4.25%.

Financial comparison website RateCity says borrowers can get over 1 percentage point off their variable home loan rate if they ask for a discount.

"Borrowers shouldn't be disheartened that the Reserve Bank kept the cash rate at 4.25% because the sluggish home loans market means the ball is in their court,” says Damian Smith, RateCity's CEO.

"We're seeing lenders offering discounts of up to 1 percent off their standard variable rates for basic home loans and many lenders - including the big four banks - have said they are willing to negotiate to retain their share of the home loan market," he says.

National Australia Bank (NAB) has announced it will beat the other major banks' standard variable home loan rates this year.

"While NAB's recent commitment to beat the other major banks on their standard variable rates is a good start to increasing competition, most borrowers will be offered a much better rate than the standard variable rates so they need to be aware of where the best interest rates are sitting,” he says.

"We know from discussions with borrowers and lenders that a well-informed customer with 20%-plus equity in their home can get a much better deal by direct negotiation.

"Borrowers need to shop around and be prepared to walk if their lender doesn't offer them a discount. We're hearing of discounts of over 1%, so that means many borrowers are capable of getting variable rates at 6% or less."

ENDS

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