With the Reserve Bank of Australia (RBA) at 4.35 per cent and indicating a rate cut may not come for some time, many Australians may be thinking about how to get a better deal on their mortgage.
Experts say Australians can save thousands of dollars by negotiating a better rate with their lender or switching to a competitor.
Here are some steps to save money on a mortgage or loan.
Don't fall for a common mortgage 'reverse marketing trick'
Research director at Rate City, Sally Tindall, says Australia's big four banks (NAB, ANZ, Westpac, Commonwealth Bank) will advertise home loan rates that are higher than the one borrowers typically end up paying.
"It seems crazy. It's a reverse marketing trick," she told SBS' Cost of Living Secrets podcast.
"It's very confusing, but big four banks typically advertise higher rates than you'll actually get. When they get you on the phone they then say they are going to offer you, for example, 2.5 percentage points off the standard variable rate ... but that's still going to get you above average."
She suggests when getting a quote: "Don't just grab the rate off their website."
"You really need to pick up the phone, haggle with them and understand what their lowest rate is. It doesn't matter how big the discount is that they're offering. What matters is the interest rate."
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Don't wait for interest rates to go down
The RBA has kept interest rates steady at 4.35 per cent since last November.
The bank says it is "not ruling in or out" raising rates again in order to get sticky inflation under control.
Its latest forecasts "are for inflation to return to the target range of 2–3 per cent in the second half of 2025, and to the midpoint in 2026".
In light of this, Canstar's finance expert Steve Mickenbecker said if borrowers opt to wait for the Reserve Bank to cut the cash rate and lenders to follow suit, they could be facing thousands of dollars in additional repayments and interest.
"Seizing the opportunity to switch now could result in considerable savings, especially with the first forecast rate cut in November," he said.
"By refinancing now, borrowers can lock away savings over the next six months or so if the cash rate cut comes in line with expectations of the big four banks in November, and then double dip when rates eventually fall."
According to Canstar's projections, if a borrower sticks with the average variable rate of 6.88 per cent and continues monthly repayments of $3,944 for a $600,000 loan over 30 years, they could end up paying $3,544 more in repayments and $4,523 more in interest over the remainder of 2024 if they wait for the Reserve Bank to cut the cash rate in November.
However, if they can switch now to the lowest ongoing variable rate of 5.75 per cent, this money would be saved.
Don't be unprepared
If you're on a variable rate rather than a fixed one, it's your right to haggle with your lender for a lower interest rate, Tindall said.
"There's nothing stopping you calling every six months. You can even call every three months if you wanted to. You're likely to get a couple of nos in those conversations, but you're also likely to get more yeses as well."
But before you call, the first thing you need to do is research, she said.
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"Go and check what rate you are paying, check what rate your bank is offering new customers for the exact same loan, but then go and get a couple of quick quotes from other competitors. So go off and get a couple of quick numbers from a low-cost lender."
Then, she says, you could push for a discount and could get a better one if you reject the first offer.
"If you say 'I want to speak to your mortgage retention team, I am thinking about switching lenders', that really tells them that you mean to play business and, even if you really don't like the rate that you are getting, you can ask them for a mortgage discharge form. That's usually enough to call their bluff."
If you've decided to switch banks to get a better deal, be prepared to do some paperwork.
When you are moving your mortgage from one lender to the other, the new lender has to put you through the standard stress tests that they have to do with any new mortgage application.
Tindall says banks are generally speeding the refinancing processes up, in a bid to get even more customers in.
Don't rely on the only banks you've heard of
The big four banks account for roughly 75 per cent of home loans in Australia, and have tried to build their reputations on being big, trustworthy institutions.
But they're not always offering the best rates, Tindall said.
"Digital banks often come with lower rates because they don't have as big overheads.
"I know a lot of people are nervous about taking out a home loan with someone that they've never heard of, but they are the ones taking on the risk," not the customer.
Several big banks have their own digital bank or online bank that's rebranded, which people often don't realise are connected, she said.
