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Tips for securing a low interest rate in 2022

Since the onset of the COVID-19 pandemic, home loan interest rates have hit historic lows in Australia. This is good news for aspiring and existing homeowners, because even a 0.5% difference in your interest rate can save you thousands over your home loan term.

However, some banks have already increased rates on their home loan products, and economists have predicted interest rates will rise further in 2023 when the Reserve Bank of Australia (RBA) hikes the official cash rate.

So, if you’re a homeowner and you haven’t reviewed your interest rate in a while, or you’re someone who plans to purchase a house soon, it’s important to stay on top of interest rates. Keep reading to find out how you can make sure you have the lowest interest rate on your home loan in 2022.

1. Keep an eye on the interest rates on offer

A good way to make sure you have a low interest rate is to search and compare the interest rates on offer by lenders. Interest rates can fluctuate regularly, so it’s worth observing them to keep on top of current rates.

If you check what interest rates are available on the market every now and then, you’ll be able to see when you could potentially save money by switching to a lower rate.

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2. Ensure you’re a low risk borrower

Before you apply for a home loan with a low interest rate or refinance to save on interest, it’s important that you review your financial situation to ensure that you’ll be eligible for low rates. Lenders are more likely to offer lower interest rates to borrowers who they consider to be of low risk of defaulting on home loan repayments.

To lower your risk and increase your chances of obtaining a low interest rate, there are a few things you can do:

  • Maintain a good credit score by paying credit cards and bills on time
  • Have evidence of solid saving habits and on time home loan repayments
  • Pay off other debts like personal loans and credit cards
  • Live within your means
  • Maintain stable employment.

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3. Negotiate with your lender to lower your rate

If you’re a homeowner who’s been with the same lender for a while, chances are you’re paying a loyalty tax – that is, you’re being charged a higher interest rate than new customers. It’s worth checking to see how your interest rate compares to the rate your lender is offering to new borrowers.

If you find out you are paying more in interest, it’s worth negotiating with your lender to lower your rate. Chances are if you’re a reliable customer and you can show proof of lower rates on the market, your lender will be more inclined to decrease your interest rate.

4. Consider refinancing for a better deal

If you’ve tried negotiating with your lender and you don’t have any luck, be prepared to look around elsewhere for a better deal. Considering economists have predicted interest rates will be on the rise sooner in 2022 than initially thought, it might be time to refinance and lock in a lower rate with another lender.

Fixed rate home loans can be a good option if you want to protect yourself from interest rate hikes. You can choose fixed terms between one and five years, meaning your interest rate will stay the same during this time, and you won’t have to worry about fluctuations in rates. However, fixed interest rates offer less flexibility than variable interest rates, so it’s important to take this into account.

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5. Don’t forget about other home loan costs and features

While getting a low interest rate on your home loan is important, it’s not the only cost or feature to consider. Other fees and charges like establishment fees, Lenders Mortgage Insurance (LMI), plus offset account or redraw facility fees are just some of the other costs to take into account when assessing if a home loan is right for you.

You should also be mindful of weighing up all of a home loan’s features, not just its interest rate. Consider questions like these:

  • Do you want an offset account or a redraw facility?
  • Would you like the flexibility to make extra repayments?
  • How long is the loan term?
  • Does the lender suit your needs?

Asking yourself these questions will help you look at a home loan in its entirety.

It’s smart to regularly check if you’re still on a competitive home loan interest rate. The easiest way to stay on top of fluctuating rates is to use an online comparison tool – you don’t even have to leave your couch. Lendi makes searching and comparing interest rates online simple. If you’re refinancing or on the hunt for a home and you need a hand, you can book an appointment with one of our Home Loan Specialists who can make sure you get a low rate.

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The information in this post is general in nature and should not be considered personal or financial advice. You should always seek professional advice or assistance before making any financial decisions.

Tags: home loan, refinance, fixed interest, interest rate, variable interest, cash rate, fixed rate home loans

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Important legal stuff

Lendi is the trading name of Lendi Pty Ltd (ACN 611 161 856), a related body corporate of Auscred Services Pty Ltd (ACN 164 638 171, Australian Credit Licence 442372). We will never sell your email address to any third party or send you nasty spam, promise.
# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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