Ask Paul: My lender won't give me a better rate - should I switch?

Hi Paul. I'm 49, a single parent with regular part-time work, earning $52,000pa. I also want to own my home before I retire.

My mortgage is around $90,000 and the resale value of the home is $340,000. I was stupidly loyal to one of the big four banks for way too long and switched to a community bank, in Tasmania, several years ago to benefit from competitive rates and actual service! Very happy with them. 

However, my fixed rate has just reverted to a variable 3.38%. I rang to try to negotiate a lower rate, with nil result. They are offering new customers 3.18%.

They have not passed on the Reserve Bank's recent cut and they fobbed me off with "the board will meet in a few weeks and if there is a cut you will be advised". No help at all, really. 

I'm not scared to refinance somewhere else.  That's why I went to them a few years ago. But do people do that every few years? Is that the best way to get the best rates - change banks after each introductory rate runs out?

I'm really not sure whether to stay and wait and see if they pass on any cut or to go elsewhere. All the good offers seem to be online banking and I'm old school and like to deal with a branch. 

I have decent super, to which I salary sacrifice. I have no other debts.  I feel as if I do all the right things. I would appreciate any advice. - Rachel

Well, Rachel, with all the drama around us, one thing is for sure: interest rates on a mortgage will be very low.

As I write this in early April, I am already seeing offers of around 2.3%.

Loyalty is a trait I love in my family and friends, but sadly it does not work with lenders. You need to be more brutal here.

Find a better deal, be prepared to move and tell your lender politely, no matter how nice they are, that if they don't match it you will leave.

But I am also concerned about the security of your part-time work.

I hope you are able to keep that work going. Most importantly, stay as safe as you can.

Get stories like this in our newsletters.