SAVVY home-loan shoppers are negotiating more than one percentage point off major lenders’ variable interest rates, saving tens of thousands of dollars in repayments.

The battle for borrowers has escalated since the start of the Spring property season, brokers, bank sources and market observers said, with the biggest savings won by assertive customers seeking to borrow at least half a million dollars who boasted a 20 per cent deposit and were willing to “bundle” other financial services such as insurance.

“The level of discounting has increased,” Mellick Wealth Management mortgage broker Fawzi Jreige said.

“You can now go to lenders and get 100 basis points off a loan size of $500,000.”

A homeowner who secured such a deal would reduce repayments by $3540 a year and $88,500 over 25 years.

Mortgage Choice head of corporate affairs Jessica Darnbrough said it was possible to get even more than 1 per cent off from lenders including the Big Four.

“Lenders are being aggressive,” Ms Darnbrough said. “They are competing for market share.”

One broker, who spoke on the condition of anonymity, said major banks were prepared to knock off as much as 1.15 per cent.

However, the biggest discounts they talk about publicly are 0.8 to 0.9 per cent.

To go beyond this it is necessary to push hard, something that most people are reluctant to do.

“Australians are still more likely to negotiate over the price of a toaster than a home loan,” said Kirsty Lamont, director at financial products comparison service Mozo, citing recent research it had conducted.

“It’s a great time to haggle your home loan,” Ms Lamont added. “You can get an extra level of discounting right now.”

Smaller lenders are willing to cut even deeper.

The unnamed broker said he was currently obtaining discounts from non-majors of more than 1.2 per cent. This reduced rates to as low as 4.75 per cent.

Since late September, Citibank has been prepared to cut as much as 1.4 per cent from its relatively high standard variable rate (SVR) of 6.19 per cent, provided more than $500,000 is borrowed and that the prospective mortgagee has a 20 per cent deposit.

HSBC has this week begun offering 1.05 per cent off its 5.95 per cent SVR. Again, the minimum loan size is $500,000.

Citibank and HSBC have less than 1.5 per cent of the $1.2 trillion market between them.

The biggest advertised discount by a significant lender appears to be 1 per cent off with St George, which is owned by the nation’s second-biggest bank, Westpac.



Make sure you know the best offers on the market before you begin negotiating


Talk to multiple lenders then play them off against each other


Be willing to bring all your financial services needs to the home lender


You’ll need to have a good credit history. Check first with the likes of Veda Deposit. Lenders will want to see a history of savings leading to a deposit equal to 20 per cent of the purchase price


The bigger the loan, the bigger the discount


Push hard to get an extra few basis points. If that’s not your style then a broker may be a good option

Posted by John Rolfe – News Limited Network on 1st November, 2013