Use your poker face — and make lenders go gaga

WITH official interest rates steady, and the banks getting nervous about their market share, your poker face could help you save thousands on your mortgage.

What people are watching on the Web on YouTube - Poker Face - Lady Gaga (music video).

IT’S time to put on your poker face.

As the Reserve Bank of Australia sits on its hands and leaves the official interest rate steady for yet another month, now looks like a good time to call your banker’s bluff.

EARLIER: Mortgage focus hurting retirement plans for Generation X

In the world of mortgages, there are two different interest rates — the rate you are paying, and the lower rate you can score if you bargain for a better deal.

New borrowers are benefiting from an interest rate war that has seen 169 variable rate loans cut since July and the average variable rate loan fall 0.31 percentage points since the RBA’s official cash rate last moved in August 2013, RateCity research shows.

However, millions of existing borrowers are missing out on thousands of dollars of benefits simply because they don’t demand a discount.

Getting 1 per cent shaved off your standard variable home loan interest rate may seem like a big ask, but others are getting it, and on a typical $300,000 mortgage the interest saving is more than $2100 a year. On a hefty $500,000 mortgage you would save more than $3500 a year.

Switching lenders can be a pain in the backside because of the associated fees and charges, not to mention all the mucking around with changing your accounts and direct debits.

The big switch ... banks are nervous about losing market share in the current economic climate.

This is where a good poker face comes in handy. You have to make your bank think you’re going to walk if they don’t give you a better deal, even though you couldn’t be bothered with the hassle.

Here’s how to do it.

1. Research what the competition is offering, using comparison websites or a good old telephone. Arm yourself with as much knowledge as you can.

2. Ask your lender what deals are available. Most offer loan packages these days that may cost a few hundred bucks a year, but you pay no fees and get good discounts off the standard variable rate that almost outweigh the package fee.

3. If your repayment history is clean and you’ve done your homework, you’re in a great position to haggle hard. If you can name some rival lenders with a cheaper rate, your bankers should squirm a bit. Threaten to switch, and there’s a good chance they will bend to your will, like a Jedi mind trick.

4. If making bankers squirm is not your forte, consider chatting to a mortgage broker. They make their money from the lenders, not you, and know more about home loans than almost anyone.

RateCity says banks have been losing market share lately — not a lot, but probably enough to worry them a little. This provides a great opportunity for you to crash the interest rate discount party.

Pop star Lady Gaga sang about keeping a p-p-p-poker face, p-p-poker face. You should do the same with your lender, but without the stutter.

Originally published as Use your poker face — and make lenders go gaga