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Rates are more flexible than you think

By Staff Reporter
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Investors concerned about lenders passing on the full rate cut should remember that they have many options, according to a chief economist.

“It is a free market around there and people can look around for the lenders with lower rates. There are some small lenders that passed on the full amount,” AMP’s chief economist, Shane Oliver, told Smart Property Investment.

However, even those without an intention to head to another lender and go through the associated fees or administration, may be able to reduce their rate further.

One thing people can do is to speak to their bank manager, he suggested.

“They’ll often find that there is a bit of flexibility around that headline number.

“That [headline number] is just a base rate that they start from and adjust to suit individual circumstances,” he said.

Banks are usually open to discussion and investors may find that the interest rate is more flexible than the number might suggest, particularly “If they have a big mortgage or are quite a loyal customer,” he said.

However, there is choice in this market, and “at the end of the day it doesn’t matter if the banks pass on 80 per cent or 100 per cent, the Reserve Bank will just keep cutting until they get the mortgage rate that they want.”

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