Your interest rate might be costing you more than it should.
If you haven't reviewed your home loan in the past year or two, there's a reasonable chance you're paying more than current borrowers with similar circumstances. Lenders typically reserve their sharpest rates for new customers, while existing borrowers drift upward unless they act. The question isn't whether rates have moved, it's whether your rate has kept pace with what's available now.
What Counts as a High Interest Rate Right Now
A high rate is one that sits noticeably above what lenders are offering to new customers with your deposit size, loan amount, and property type. At current variable rates, owner-occupier loans with principal and interest repayments and a deposit of at least 20% generally sit in a tighter band than loans with smaller deposits or interest-only structures. If your rate is more than 0.30% above what's being advertised for equivalent loans, that gap is worth examining.
Comparison rate can help, but it bundles fees into a single figure that may not reflect your actual borrowing term or loan size. Focus first on the interest rate itself, then calculate what that gap means in dollar terms over the time you expect to hold the loan.
How Lenders Treat New Customers Differently
Lenders compete hardest for new business. A borrower refinancing into a new lender with a solid repayment history and adequate equity will often receive a rate that sits below what that same lender offers to someone who has banked with them for years. This isn't a promotional discount that reverts after twelve months, it's the ongoing rate attached to that loan.
Consider a borrower in Mount Macedon with a $450,000 loan balance, a property valued around the current median for the area, and a clean repayment record. If they've been with the same lender since purchase and haven't questioned their rate, they might be sitting on a variable rate that's 0.50% or more above what they'd receive by switching. Over a year, that 0.50% gap on $450,000 adds roughly $2,250 in additional interest. Over five years, it compounds further.
When a Rate Looks Fine But Still Costs You
A rate that falls within the general range of advertised rates can still be too high if it doesn't match your risk profile. Lenders price based on loan-to-value ratio, employment type, loan purpose, and repayment structure. A borrower with 40% equity and salary income should not be paying the same rate as someone with 10% equity and variable contract work.
In our experience, borrowers in regional areas like Mount Macedon sometimes assume their location limits their options, but postcode alone doesn't determine your rate. What matters is property valuation, loan size relative to that valuation, and your capacity to service the loan. If your equity position has improved since you first borrowed, or your income has increased, your rate should reflect that.
Fixed Rate Loans That Have Rolled to Variable
If your fixed rate recently expired, the variable rate you've rolled onto is almost certainly higher than necessary. Lenders do not automatically place you on their most competitive variable rate when your fixed term ends. You roll to their standard variable rate for your loan type, which is rarely the sharpest rate they offer.
This is one of the clearest signals to review your loan. The rate you're on now was not negotiated, it was assigned. You can often secure a lower rate by speaking with your current lender or moving to a new one. If you're unsure whether the rollover rate is reasonable, compare it to what new borrowers are being offered on equivalent variable products.
The Cost of Switching and Whether It's Worth It
Switching lenders involves discharge fees from your current lender, application fees with the new lender, and valuation or settlement costs. Discharge fees typically sit between $300 and $500. Application fees vary, some lenders waive them. Valuation might add another $200 to $300 depending on property type and location.
If the rate difference is 0.40% or more and your loan balance is above $300,000, the interest savings will usually outweigh the switching costs within the first year. On a $400,000 loan, a 0.40% reduction saves around $1,600 annually. After covering $1,000 in switching costs, you're ahead from month eight onward, and the saving continues every year after that.
What to Do If You Think Your Rate Is Too High
Start by checking what your current lender offers to new customers on loans similar to yours. If there's a gap, contact them directly and ask for a rate reduction. Some lenders will adjust your rate to retain you, others will not move unless you're prepared to leave.
If your lender won't negotiate or the reduction they offer still leaves you above market, a loan health check will show what's available elsewhere. This involves comparing your current rate and loan structure against what other lenders would offer based on your equity, income, and repayment history. It's not about chasing the lowest advertised rate, it's about identifying whether a switch delivers enough value to justify the effort and cost involved.
Call one of our team or book an appointment at a time that works for you.
Frequently Asked Questions
How do I know if my interest rate is too high?
Compare your current rate to what lenders are offering new customers with similar loan amounts, deposit sizes, and property types. If your rate is more than 0.30% above current market offerings for equivalent loans, it's worth investigating.
Will my lender lower my rate if I ask?
Some lenders will reduce your rate to retain you, particularly if you have strong equity and a solid repayment history. Others will not move unless you're prepared to refinance elsewhere.
What does it cost to switch lenders?
Typical costs include discharge fees of $300 to $500, potential application fees, and valuation or settlement costs of around $200 to $300. If the rate difference is significant, these costs are usually recovered within the first year through interest savings.
Does my location in Mount Macedon affect the rate I can get?
Your postcode alone doesn't determine your rate. What matters is your property valuation, loan-to-value ratio, income, and repayment history. Regional location does not automatically mean higher rates.
Should I refinance if my fixed rate just expired?
If your fixed rate has rolled to a variable rate, you're likely on your lender's standard variable rate rather than their most competitive offering. This is a clear signal to review your loan and compare what else is available.
