The Finance Brokers Association of Australia (FBAA) says a little research on the part of borrowers will help some avoid paying a higher rate even if the RBA lifts interest rates today.

FBAA managing director Peter White AM said many borrowers have no idea if the rate they are paying is the best available.

“Lenders often incentivise new business by offering lower rates to new customers than they provide to existing customers,” he explained.

“It’s their trick to make more money, but you don’t have to be a victim of what we term ‘lender loyalty tax’.”

Mr White outlined three simple steps to ensure you are paying the lowest repayments on offer.

“First see what other lenders are offering and compare this with what you are paying, and the best way to do this is to talk to a mortgage broker.

“There’s no charge for this, and a broker has access to lender options not available to the public direct, including non-bank lenders.”

“If you find a better rate than what are you are currently paying, contact your lender and ask for a lower rate. 

He said many borrowers aren’t aware they can renegotiate a rate during the term of a mortgage, but warned, “they won’t call you; you have to make the approach.”

Mr White said if the lender won’t budge, go back to the mortgage broker and refinance at a lower rate.

“Your broker will do everything possible to source a better deal for you that meets your specific needs, and unlike banks who act in the best interests of their shareholders, mortgage brokers are legally obligated to act in the customer’s best interests.”

He said that even a small increase of 0.25 per cent today will increase annual repayments by over $1300 on a loan of $700K, and more on larger loans.

A rate rise is also likely to pull back housing price increases over the short term.

“Any increase will lessen affordability, particularly as loan applications including refinancing are assessed at the rate plus three per cent due to the current serviceability buffer rate,” Mr White said.

“This means less borrowing capacity and downward pressure on house prices.”