What three RBA rate rises mean for your home loan strategy
Three consecutive RBA rate hikes have put pressure on home loan repayments across Australia. Many owner-occupiers are now paying above 6% on their variable rate, with more pain added after the most recent quarter-percentage-point rise. But borrowers who are willing to be strategic can still negotiate a better home loan rate, or find a lender willing to offer one.
The landscape has shifted since 2023, when banks were competing heavily for market share. Today, lenders prioritise profitability. That means simply calling your bank and asking for a discount is unlikely to deliver the best result. You need a plan.
Trigger the lender
The most effective way to unlock your lender’s best rate is to signal that you are genuinely ready to leave. Start by shopping around and finding a competitive offer from a rival lender. Then take the step most borrowers overlook: submit a discharge form to your current bank.
A discharge form is the paperwork used to formally close a home loan and transfer it elsewhere. Submitting one sends a clear message that you are serious. In most cases, it triggers a call from the lender’s retention team, who have access to deeper discounts than any rate the bank advertises online.
That’s often the moment lenders reveal their best price. Until that point, many are simply not motivated to move. To see how a lower rate changes your repayments, use our loan repayment calculator before your negotiations begin.
Your equity edge
Your equity position plays a big part in how attractive you are to lenders. If your property has grown in value since you bought it, your equity has grown with it, and that works in your favour.
A borrower who started with 20% equity and now sits at 30% is considered a safer customer. The same logic applies at each rung up: 30% to 40%, 40% to 50%. A stronger equity position means lower risk for the lender, and lower-risk borrowers typically qualify for better rates.
Before approaching anyone for a better deal, get an updated property valuation. It costs relatively little and gives you a much stronger negotiating position. If you’re unsure whether to stay and negotiate or switch lenders entirely, our guide on whether to refinance now or wait can help you weigh up the options.
Cash-back offers
A number of lenders, mostly smaller banks and non-bank lenders, still offer cash-back packages to new mortgage customers. These typically range from $2,000 to $4,000 and usually require the borrower to have at least 20% equity.
Cash back can be appealing, but the interest rate matters more over the long run. A $3,000 payment disappears fast if the underlying rate is above average. Look for a combination of both: a competitive ongoing rate and a cash-back sweetener on top.
Experts say competitive owner-occupier rates are still available even after recent hikes. In many cases they start with a five, but you may need to look beyond the major banks. Smaller lenders and credit unions are often where the best deals are found right now.
Run the numbers
Switching home loans is not free. Most borrowers pay just over $1,000 in fees when changing lenders, covering discharge costs from the outgoing bank and application or settlement fees from the new one.
Before committing to a switch, calculate how quickly the savings cover that cost. If a lower rate saves you $150 per month, a $1,000 exit cost pays itself off in under seven months. Beyond that point, every month is money back in your pocket.
Use our borrowing power calculator to understand your financial profile before approaching a new lender. Knowing your numbers upfront makes the process faster and puts you in a stronger position.
Negotiate a better rate
If you’re ready to act, here is a practical sequence that works.
A mortgage broker can help you navigate this process without the guesswork and without hours of research. Talk to the team at Serres Property Finance to find out what rate you should actually be paying.
Common questions
Q: How do I negotiate a better interest rate with my bank?
Start by getting a competing offer from another lender, then contact your current bank and ask for a rate review. If they won’t move, submitting a discharge form usually triggers a call from their retention team with their best rate. Having a higher equity position also strengthens your case significantly.
Q: What is a mortgage discharge form and when should I use it?
A discharge form is the document used to close a home loan and transfer it to another lender. Many borrowers use it as a negotiating tool because it signals genuine intent to switch, which typically motivates lenders to offer a much better rate. You don’t have to actually leave, but lenders respond very differently once they see that paperwork.
Q: Are cash-back home loan offers worth it?
Cash-back offers of $2,000 to $4,000 exist in the market, mostly from smaller lenders. They are worth considering only if the interest rate is also competitive. Over the life of a loan, the rate matters far more than a one-time cash payment. A broker can help you find deals that combine both a competitive rate and a cash incentive.