Hi, I just read this.
What does it mean? e.g. on CBA's website the variable rate is 4.87% with wealth package, soon to be 4.62% after RBA cut. How do they get the 3.54% rate? Is it a negotiation thing? But if its negotiation it's all random based on how much the bank is willing to drop for the individual. Unless they somehow know the absolute lowest rate someone is paying, but that's not a realistic scenario for others and they wouldn't write it in the article.
FYI: New home loans. Can't transfer to this if you already have a CBA home loan
They told me to actually transfer to this home loan because I had the economiser that is no longer for sale. I asked them for a better rate and they said change to the extra home loan. I didn't yet.
can u please explain how extra differs from normal home loan? sorry im new to this.
The "Extra Home Loan" is a home loan to attract new customers
how do they get the 3.54% rate? is it a negotiation thing?
Sorta. Most big banks have a reference variable rate e.g. 4.62% that you refer to. But most, probably all, also advertise a "discounted rate" on various home loan packages. It's mostly a marketing thing so people feel like they are getting a deal, and partly a competitive thing as they know people shop around for the best rate, so they discount as necessary.
For example I think I'm getting a "1.78% discount" off my banks standard variable rate. Its just a marketing tool really.
Basically if you're paying the "standard rate" you're getting totally ripped off, and not many banks would actually expect you to pay this rate unless you're a total nupty :D
wow ur getting 1.78%, u must have silver tongue. i read here https://forums.whirlpool.net.au/archive/2705960 and people were averaging 1.4-1.5, highest was 1.55. may i ask how u were able to get 1.78?
Well it's all relative to whatever rate your bank advertises as it's "standard rate". My banks might standard rate be slightly higher than others. So it doesn't actually mean much without the context.
Anyway I am on 3.39% if that helps you compare. So my banks standard rate is 5.17% after the recent 0.25% RBA cut.
Remember it's very much a marketing/advertising thing. My bank could advertise 6% if they wanted then I could say I'm getting a 2.61% discount…. it's still kinda meaningless. You shouldn't be comparing the discount, you should just compare the comparison rates (which are based on $250k home loan) and incorporates the fees as well.
hey thanks for the answer i got another question. e.g. on cba's page https://www.commbank.com.au/home-loans.html?ei=anch_product, hows the comparison rate calculated? i added the wealth package, assumes 150k loan, didn't get their comparison rate. without wealth package added upfront frees etc still didn't get their comparison rate, their rate is always higher than what i calculated, are there hidden costs they don't mention? this is so confusing lol.
@Gerry H: Dunno to be honest, you'd need to ring CBA and ask. Might be monthly fees on offset accounts for example, or it includes application fees, legal fees etc.
Extra home loan does not come with an offset account and you need 70% LVR for the 3.54 rate FYI. Best to go for non-banks if you want the lowest rates and fees.
The "extra home loan" is the lowest advertised variable rate at 3.79%. Minus 0.25% = 3.54%