Why Can’t I Get a Lower Interest Rate When Other Mortgage Providers Offer Lower Rates?

The interest rate your bank charges on your home loan depends on several factors. Some are outside the bank’s control, such as the cash rate set by the RBA. However, other factors that determine how much your lender charges you in interest are controlled by the bank. For instance, banks may charge higher interest rates on larger loans than smaller loans, investment loans over owner-occupied home loans, and higher rates to existing customers over new customers. 

Will Your Bank Lower Your Interest Rate?

Let’s say you have done all the steps to start negotiating your interest rate with your bank. You’ve run rate comparisons to determine how your interest rate compares to comparable loans from other lenders. You’ve determined the rates your lender offers to new borrowers. You asked your broker to submit a pricing request. Unfortunately, even if you take all these steps, your mortgage provider may be unwilling to lower your interest rate. There could be several different reasons your bank won’t negotiate:

• Your loan size may be too large. Some banks are unwilling to lower interest rates for loans above a certain amount. 
• You may be on a fixed interest rate. Fixed interest rates cannot be changed until the end of the fixed-rate term. 
• You may be too loyal to your bank. If you use the same bank for all of your accounts and loans, they may consider you a “sticky customer,” meaning they think you are less likely to leave or refinance with another lender, even if they don’t lower your interest rate. 

Is There Anything You Can Do?

Regardless of the reason for your bank’s unwillingness to lower your interest rate, the brokers at Mortgage House can help. We can help you refinance your loan at a more competitive rate than your current one.