Canstar research shows banks offering discounts on mortgages for low-risk borrowers

Canstar research shows banks offering discounts on mortgages for low-risk borrowers

Borrowers with big deposits or equity in their homes can shave more than $50 a month off their mortgage repayments as banks ramp up efforts to win low-risk customers.

Research by financial comparison site, Canstar, shows up to half of all lenders are now offering discounts to borrowers with a sizeable deposit or home equity.

Canstar group executive of financial services, Steve Mickenbecker, said banks were seeking to counter the risk posed by falling house prices on the east coast.

Camera IconCanstar’s Steve Mickenbecker says customers need to ask to get the discounts. Credit: METHOD

He said the discounts were being offered by many lenders in WA even though local property prices had not fallen.

But Mr Mickenbecker said it was up to borrowers to request the discount from their bank, with lenders highly unlikely to volunteer the potential saving.

The new research shows that 49 per cent of banks are offering customers with a 40 per cent deposit – or equity in their home worth the same amount – a discount on their interest rate worth an average 0.21 per cent.

Do not wait for a bank to tell you because it rarely happens

Its research states that a $470,000 loan with these banks would normally be subject to an average variable rate of 3.69 per cent interest, if the borrower had an 80 per cent loan-to-value (LVR) ratio on a mortgage for a $587,000 house.

However, these same lenders would discount the rate to 3.48 per cent for the same sized loan for customers with a 60 per cent LVR, which is worth a saving interest of $56 per month in.

“When it comes to the discount, you have to take the initiative – do not wait for a bank to tell you because it rarely happens,” Mr Mickenbecker said.

“And a 0.21 per cent discount is a decent saving.”

The research shows a smaller interest rate discount – worth 0.13 per cent – is being offered by almost a third of lenders to customers with a 30 per cent deposit, or the same sized equity in their home.

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