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Home Loan Borrowers Encouraged to Seek ‘Under the Table’ Discounts for Best Interest Rates
Borrowers looking for the most competitive home loan interest rates are being advised to negotiate for “under the table” discounts to secure the best deals. This advice comes in light of the Reserve Bank’s recent softer stance on the official cash rate (OCR), which has led many economists to anticipate earlier cuts. In response, wholesale markets have already priced in these potential reductions.
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Recently, Westpac reduced some of its shorter-term interest rates, lowering its one-year special rate to 6.89 percent. Following suit, ANZ cut its one-year rate to 6.85 percent. However, Glen McLeod of Edge Mortgages mentioned that these rates were already accessible to his clients.
“[They say] ‘we’ve dropped our six-month rate from 7.25 percent to 7.05 percent,’ but we’ve been securing 6.99 percent or 6.85 percent for a while now. That one-year rate of 6.85 percent from ANZ has been available for about eight weeks, and I can get even better rates from them currently,” McLeod explained.
Shayna King, director of Loan Market South in Christchurch, echoed McLeod’s sentiments. She highlighted that home loan rates typically fall into three categories: standard rates for those without enough equity to qualify for specials, advertised special rates, and lower “under the table” rates.
“ANZ’s advertised special rate is 6.85 percent, but their actual discounted rate has recently dropped to 6.65 percent,” King said.
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David Cunningham, CEO of Squirrel, noted that the new advertised rates are in line with what Squirrel brokers have been obtaining for months. He attributed these drops to falling wholesale rates.
Despite these reductions, McLeod pointed out that banks are not aggressively competing for new business at the moment. Cashback offers for new lending remain around 0.9 percent of the loan value.
Cunningham added that a significant “mortgage war,” where banks fiercely compete for new customers, is unlikely until the housing market sees a revival. “That could be a 2025 story,” he said.
In summary, while some banks are adjusting their advertised rates, savvy borrowers can often negotiate even better deals. For those seeking the most favorable home loan interest rates, pushing for these “under the table” discounts may be the key to securing the best financial outcome.
SOURCE: RNZ