No Letter from Your Bank Yet? You Could Be Paying Too Much

Interest rate cuts have been happening across the Australian market, but if your bank hasn’t reached out to notify you of a reduced rate, likely, you’re still paying more than you need to on your home loan or other borrowing. With many lenders offering better deals to new customers, existing borrowers can miss out unless they take proactive steps.

Why Aren’t All Banks Passing on Rate Cuts?
Banks often prioritize attracting new customers with lower interest rates and promotional offers. However, existing customers don’t always automatically receive these benefits. Some lenders delay or partially pass on rate cuts, keeping their current borrowers on higher rates longer to protect their margins.

While the Reserve Bank of Australia (RBA) and other central banks have cut official rates, many banks have been slow to fully reflect these reductions in their variable loan rates. This means your mortgage repayments might not have decreased even though market rates have fallen.

How to Know If You’re Paying Too Much

• Check your current interest rate: Compare it with the latest market rates. Many lenders now offer variable rates below 4%, with some as low as 3.3%.
• Look out for communication: If your bank hasn’t sent you a letter or notification about a rate cut, it’s a red flag.
• Review your loan statements: See if your repayments have changed in recent months.

If your rate is still above the current market average, you could be overpaying by hundreds or even thousands of dollars annually.

What You Can Do About It

1. Contact Your Lender
Reach out to your bank and ask if they can offer a better rate. Sometimes, simply expressing your intention to look elsewhere can motivate them to provide a competitive offer.

2. Shop Around
Don’t hesitate to compare rates from other lenders. Many banks and non-bank lenders offer attractive deals to new customers, including lower interest rates and reduced fees.

3. Consider Refinancing
Switching your loan to a different lender can secure you a lower interest rate, potentially saving you significant money over the life of your loan. Refinancing is now easier than ever, with banks offering streamlined switching processes.

4. Use a Mortgage Broker
A broker can help you navigate the market, find the best deals, and negotiate on your behalf, saving you time and effort.

Why Acting Now Matters

Interest rates may not fall further for some time, as global economic uncertainty and inflation concerns keep central banks cautious. The US Federal Reserve, for example, has indicated that rate cuts are not imminent, and many experts expect rates to remain steady or only gradually decline.

That means waiting for your bank to come to you could cost you money. Taking control now ensures you benefit from current lower rates rather than missing out.

Additional Tips to Save

• Improve your credit score: A higher credit score can unlock better loan rates.
• Reduce your debt: Lower overall debt improves your borrowing power and may qualify you for better rates.
• Avoid unnecessary fees: Check your loan for hidden fees or charges that could be negotiated or eliminated.

In Summary

If your bank hasn’t contacted you about a rate cut, it’s time to be proactive. Compare your current rate with market offers, negotiate with your lender, and consider refinancing if better deals are available. Taking these steps can reduce your repayments, save you money, and give you greater financial flexibility.

Don’t wait for your bank to make the first move — act now and take control of your borrowing costs.

Sources:

• CNBC – Fed Interest Rates and Smart Money Moves, May 2025
• Reuters – Fed Rate Cut Expectations, April 2025
• Bank of England – Interest Rate Updates, May 2025
• Westpac – Home Loan Interest Rate News, June 2025
• LendingTree and Debt.com expert advice on managing high interest rates

1. https://www.cnbc.com/2025/05/30/fed-interest-rates-higher-money-moves-to-consider.html  
2. https://www.reuters.com/business/traders-pare-bets-fed-rate-cuts-2025-still-see-june-start-2025-04-30/ 
3. https://pennsylvaniaindependent.com/economy/federal-reserve-rate-cuts-to-slow-in-2025/
4. https://www.bankofengland.co.uk/explainers/current-interest-rate
5. https://www.westpac.com.au/personal-banking/home-loans/manage-home-loan/latest-interest-rate-changes/