Banks giving rate discounts
There is one positive aspect to the bank’s raising interest rates above the reserve bank’s guidance. Borrowers are increasingly being given rate discounts by banks in order to prevent them from changing to a lower lender.
Investors with substantial borrowings from lenders other than NAB have been able to cite NAB's lower competing rates and successfully negotiate an extra 0.2 per cent discount off their existing interest rate.
Jane Slack-Smith, principal of Investors Choice Mortgages, says it is easier to negotiate as an existing customer than as a new borrower. "In the last six months the negotiation on discounts has been very, very difficult, especially when establishing a loan," she says.
"However once you're with a lender, if you believe that there's a genuine opportunity elsewhere with a lower rate then it is possible to call your lender and ask if it's possible for them to do better for you. No harm in asking."
Slack-Smith says borrowers need to be aware of the competing products and the process of switching if they are going to engage their lender in a discussion about rate discounts.
Source: Australian Property Investor Magazine