Home loans and mortgages can be daunting, especially when you're trying to decipher an ancient language filled with interest rates, repayment plans, and financial jargon.

But what if there’s a way you could potentially save thousands on your mortgage repayments each year by asking one simple question?

That's right, it's time to arm yourselves with the knowledge that could keep your hard-earned money where it belongs—in your pocket!

Recent insights from mortgage software company Sherlok have shed light on a strategy that could lead to significant savings for homeowners.

The research suggested that banks are willing to reduce mortgage rates by nearly half a per cent on average when customers ask.

Banks can lower mortgage rates by almost half a per cent. Credit: Shutterstock

Let's break it down with an example: imagine you have a $600,000 loan. By negotiating a rate cut, you could save approximately $2760 annually.

Adam Grocke, the founder of Sherlok, said, ‘You can save $2000 or $3000 a year.’

‘People should be doing this every 11 months. So, 11 months since their loan settled or 11 months from the last time they negotiated with their lender,’

This advice is underscored by a statistic from the latest Financial Stability Report released by the Reserve Bank of Australia, which found that one in every 20 mortgage holders spends more on repayments and other living expenses than they earn.

AMP Capital Chief Economist Shane Oliver echoes the sentiment of ‘huge savings’.

‘Obviously, you have seen a massive increase, more than $10,000 from the low point, but nevertheless, that saving will be welcomed,’ Oliver said.

With the Reserve Bank's rate cuts potentially being delayed due to inflation concerns, as economists reported the importance of individual action becomes even more pronounced.

‘The debate at present isn't so much around whether we will get rate cuts but when they will happen,’ Oliver said.

‘The concern is those rate cuts will be delayed to later this year or early next year.’

The financial markets have already announced at the beginning of the year that there will be interest rate cuts by March 2024.

While there may be delays, the predictions for these cuts look promising.

What are the upcoming interest rate cuts you need to know? You can read more about them here.

Key Takeaways

• According to experts, Australian homeowners may save significant sums on their home loans by simply inquiring about rate reductions with their banks.
• Recent research indicates that banks may reduce mortgage rates by nearly half a per cent upon request, leading to an annual saving on average.
• Economists underscore the potential for substantial savings despite recent increases in loan repayments.
• The current economic debate is focused on the timing of potential Reserve Bank rate cuts amidst inflation concerns rather than the certainty of the cuts themselves.

Members, have you tried negotiating your mortgage rate with your bank? What are your thoughts on this? Let us know in the comments below.

 

[Smitheemma]

I've tried it myself and managed to lower my payments significantly.

 

[MartinQubik]

When I first heard about it, I was skeptical, but the savings are real. Last year, I decided to give it a try after reading about how banks are open to reducing rates if you ask. Using a home loan calculator beforehand helped me prepare for the conversation and understand exactly how much I could save. It's a simple process that can lead to substantial yearly savings, like the $2760 example mentioned. With interest rates fluctuating and potential rate cuts on the horizon, now seems like a good time to take action. Have you thought about giving it a shot? It could make a big difference.