Banks price new customers and existing customers differently. The sharpest rates tend to go to people walking in the door, while borrowers who have been with a lender for a few years often sit on a rate that has drifted well above it. Nobody tells you when that happens. You find out when you compare, or when a friend mentions what they're paying.

The good news is that the gap can often be closed with a phone call. Most lenders would rather drop your rate than lose the loan. You just need to ask in a way that gets taken seriously.

Why your rate drifts in the first place

When you take out a loan, you get the rate on offer that week, sometimes with a discount on top. After that, your rate moves with the lender's standard variable rate. Meanwhile the lender keeps adjusting the deals it offers new borrowers to win business. Over a few years those two numbers can end up a long way apart, and the difference is pure margin for the bank.

It adds up quickly. On a $900,000 loan, each 0.25% is roughly $2,250 a year in interest. A gap of half a percent is about $4,500 a year, every year, for doing nothing.

Before you call: five things to have in front of you

  • Your current rate and whether it is variable, fixed or split. It's on your statement or in the banking app.
  • Your loan balance and a rough property value. Lenders price by loan-to-value ratio, and if your home has gone up or you have paid the loan down, you may now sit in a cheaper pricing band.
  • What the same lender offers new customers for a loan like yours. It's usually advertised on their own website.
  • One or two competing offers you could realistically get. A broker can give you this without you applying anywhere.
  • Your repayment history. If you have never missed a payment, say so. It's part of your case.

How to ask

Call and say you would like a rate review because you are thinking about refinancing. That second part matters. A general enquiry tends to go to a frontline team with little room to move, while a customer who might leave is usually passed to a retention or pricing team that can approve a discount.

Be specific. "I've seen new customers offered X on a loan like mine, and I have an offer elsewhere at Y" gets a better response than "can you do anything on my rate?". If the first answer is no, ask whether it can go to pricing for a second look. Some lenders only move once you request a discharge form, which signals that you are serious about leaving.

If they agree, ask for it in writing, and check three things: that it applies to every split on the loan, when it takes effect, and whether it is tied to a package or an annual fee you don't currently pay.

Check if your property value has moved

This one gets missed a lot. Many lenders set rates in loan-to-value bands, so a borrower at 65% of the property's value can be offered a lower rate than one at 85%. If you bought on the North Shore or Northern Beaches a few years ago, your loan-to-value ratio may have dropped a long way since. Ask the lender whether a revaluation would move you into a better band. Some will do it at no cost.

If you're on a fixed rate

A fixed rate can't usually be repriced mid-term without break costs. The moment to act is just before the fixed period ends, when the loan is about to roll onto the lender's revert rate. That revert rate is rarely their best one. Put a reminder in your calendar two or three months ahead, so you have time to negotiate, or refinance if they won't play ball. Our fixed vs variable guide covers what to weigh up when choosing what comes next.

When the answer isn't good enough

Sometimes the lender won't move, or not far enough. Before you switch, work out what moving would actually cost:

  • Discharge fees on the old loan, plus government fees to discharge and register the mortgage.
  • Any application, valuation or settlement fees at the new lender, although these are often waived.
  • Break costs if part of the loan is fixed.
  • Lenders mortgage insurance again, if your loan is above 80% of the property's value. LMI doesn't transfer between lenders, and on its own it can wipe out years of savings. Our LMI guide explains how it works.

Divide the total by the monthly saving and you have the number of months to break even. We go through the rest of that decision in when is it worth refinancing.

Remember too that a refinance is a fresh application. A rate review with your current lender usually isn't. If your income has dropped, you've gone self-employed or you've had a credit hiccup since you borrowed, staying and negotiating can be the safer path, even at a slightly higher rate.

Make it a habit

One rate review won't hold forever. Rates move, and so do the deals lenders use to win new customers. Checking once a year, and any time a fixed period is about to end, is usually enough to stop the gap opening up again.

If you'd rather not make the call yourself, we can help. We compare 60+ lenders, so we can tell you quickly whether your rate is competitive, ask your lender to reprice where we manage the loan, and run the numbers on moving if that's the better option. See our refinancing service, get in touch or call 1300 001 755. We're based in Forestville and work with borrowers from Chatswood to Manly.

Frequently asked questions

Will my bank lower my home loan rate if I ask?

Often, yes. Many lenders will reduce an existing customer's rate rather than lose the loan, particularly if you have a good repayment history and can show a competing offer. Ask for a rate review and mention that you are considering refinancing.

Does asking for a rate review affect my credit score?

A rate review with your current lender doesn't normally involve a new credit application, so it shouldn't appear on your credit file. Applying to refinance with a new lender does involve a credit enquiry.

Can I get a lower rate on a fixed home loan?

Usually not without paying break costs while the fixed term is running. The best time to negotiate is in the two or three months before the fixed period ends, before the loan rolls onto the lender's revert rate.

How often should I review my home loan rate?

Once a year is a sensible habit, plus whenever a fixed period is about to end or your property value or loan balance has changed a lot.

General information only. It does not take your objectives, financial situation or needs into account, and it is not credit or financial advice. Lender policy, rates and eligibility change regularly and vary between lenders — talk to us about your own circumstances before acting on anything here.