0.5% on your mortgage sounds tiny. It isn't.
0.5% doesn't sound like much.
Here's what it actually means in cash — on a $600,000 mortgage over 30 years, principal + interest.
| At 5.5% | At 6.0% |
|---|---|
| $3,422/month | $3,612/month |
| $631,824 total interest | $700,429 total interest |
The difference:
- $190 more every month
- $2,280 more every year
- $11,400 over 5 years
- $22,800 over 10 years
- $68,605 over 30 years
That's a car.
That's a holiday every year for ten years.
That's $68,605 that stays in your pocket — or doesn't.
And $600k is not a big mortgage in Australia anymore. On a $900k mortgage the same 0.5% gap is closer to $100,000 over 30 years.
Numbers verified via MoneySmart's mortgage calculator (ASIC). Always cross-check with your own loan schedule or a licensed mortgage broker before acting.
Try the NestWise rate-impact calculator → — same formula, side-by-side, free.
The thing about your interest rate
Your bank knows what rate you're on.
They know what better rates exist.
They don't call you.
But if you call them and ask for a rate review — they often just say yes. Immediately.
One phone call. $190 a month. $68,605 over the life of your loan.
Why banks don't lower your rate automatically
Australian home loans are priced for acquisition. Banks advertise their sharpest rates to win new customers. Existing customers stay on whatever rate they signed up for, plus small drift-ups every time the standard variable rate moves.
There's no regulation forcing banks to re-rate you. The retention team has authority to discount — but only when asked. The bank's default assumption is you're too busy / too loyal / too indifferent to leave.
The lever is entirely in your hands. They will not pull it for you.
What to say — the 3-minute script
- Call your lender's home loan retention team (not the general call centre — ask for retention or "rate review").
- Have your loan number + property address ready.
- Open with: "I've noticed rates have moved and I'm reviewing my home loan. What's the best rate you can offer me today?"
- If the offer is weak — "I'm considering refinancing to [competitor] at [advertised rate]. Can you match?"
- If they say no — thank them, hang up, and start the refinance conversation properly. Most of the time they don't say no.
Common outcomes:
- Best case: 0.2%–0.5% off your current rate, on the spot, no paperwork.
- Middle case: A "review" pending manager approval, comes back in 2–3 days with a smaller discount.
- Worst case: No movement — which triggers the refinance evaluation. Also fine.
When to review
- Every 12 months at minimum
- When the RBA moves — cuts usually get passed on but not the full amount; hikes often get passed on immediately. Either way your relative position shifts.
- 90 days before a fixed period ends — banks let expiring fixed loans roll onto the standard variable rate (usually the worst rate they offer). Refix or refinance before then.
Rate review vs refinance — quick decision
| Rate review | Refinance | |
|---|---|---|
| Effort | 15-minute call | 4–8 weeks of admin |
| Cost | $0 | $150–$500 discharge + $200–$400 settlement + possible LMI top-up |
| Discount available | 0.2%–0.5% typical | 0.5%–1.0% typical |
| Credit impact | None | Application on your file |
| Cashback | Rare | Often $2,000–$4,000 through 2025–26 |
Always try the rate review first. It's free, fast, and often enough. Refinance if they won't budge or the gap to the market is too big to close.
Watch out for
- Break costs on fixed loans — if you're partway through a fixed period, both rate review AND refinance may be blocked by exit costs. Wait until 90 days before roll-off.
- LMI (Lenders Mortgage Insurance) top-up — if your LVR was above 80% and property values have moved against you, refinancing might trigger a new LMI premium. Check your LVR first.
- Cashback conditions — some cashback offers require you to stay 2–3 years or claw the money back. Read the fine print.
- Comparison rate ≠ headline rate — always compare the comparison rate (which includes fees) not just the advertised rate.
What NestWise does for your mortgage
NestWise captures your mortgage as a proper entity — lender, rate, balance, property address, offset — not just a "$X per fortnight" bill line. Free, always. Multiple mortgages supported for investment-property owners.
Once your rate is on file, we can flag when it's drifted materially above competitive market rates, and prompt you to trigger a review before it costs another year of missed savings.
Add your mortgage in the Housing hub → Scan your statement or fill in what you know. Free forever — as many mortgages as you have.
When did you last check yours?
If it's been more than 12 months, you might be quietly paying the price of the 0.5% gap right now. One phone call is all it takes to find out.
Not financial advice. Sources: ASIC MoneySmart mortgage calculator (figures based on $600,000 P&I over 30 years). Always verify with your lender or a licensed mortgage broker before making changes.