01.Negotiate a better deal
Approach your bank for a better deal - and chances are they'll oblige. That's what our survey of more than 2000 members concluded. Roughly a third of transaction account and home loan customers were proactive in asking their financial institution for a better rate, and the majority of them got it. One in 10 of those who convinced their bank to give them an interest rate reduction, scored between a 1%-2% discount.
The Big Four banks again ranked bottom for customer satisfaction, while building society and credit union customers fared well. It’s encouraging to see greater competition in home loans, with two smaller banks and credit unions coming top for home loan satisfaction. While switching products may take time and effort, just calling your bank is much less onerous. More often than not, you’ll be rewarded with a large saving in fees and interest rates.
What we found
- Commonwealth (CBA) rated best for negotiating with its customers for home loans (just ahead of NAB) and Westpac for transaction accounts.
- ANZ and Westpac were most likely to give their customers an interest rate reduction on their home loan.
- ING Direct proved reluctant to negotiate, but claims this is because its rates are already competitive. Members ranked ING second-best for home loan satisfaction, so it rings true.
- Transaction account customers who sought a better deal were usually offered a better product.
Of the members who received an interest rate reduction from their bank, about two in five got a reduction of up to 0.25%, one in four received between 0.25% and 0.5% and about another one in four got between 0.5%-1%. One in 10 even got between 1%-2%. A 1% interest rate reduction on a $400,000 mortgage will save you more than $75,000 over 25 years; a 0.25% reduction saves you about $20,000. In many cases, you’re simply getting what you’re entitled to anyway, as home loan packages offering interest rate savings of about 0.7% are now available to most borrowers.
Negotiating a better deal
If you’re not happy with your current financial institution, tell them you’re prepared to take your business elsewhere, and where possible quote better products from other institutions. Some members are doing their own research and taking action without even talking with their financial institution. “I can see and compare standard offerings from institutions for myself on the internet,” said one CHOICE member. “You don’t need to contact an organisation’s sales rep to get a better deal – just shop around for more independent advice.”
Many members reported good experiences with personal banking managers. “We deal with ours directly rather than ringing the mortgage centre when we have an issue with any of our banking,” said one. “He solves it promptly and smoothly, whereas the mortgage centre seems to be useless and lacks internal communication.”
Some institutions are being pro-active. According to one customer, “ANZ contacts me every year to check whether my current banking arrangements are satisfactory, and if not whether they can make them more advantageous. I find this service very useful.”
A few ING Direct customers told us that ING did not negotiate with them when they asked for a better deal for their home loan. ING Direct told CHOICE its home loan offers are already competitive and all discounts clearly published. Members obviously agree, ranking ING Direct the second-best institution for home loan satisfaction.