Is Your 6.24% Variable Investment Loan Too High? What I'd Do When the Bank Won't Move

If you're sitting on a 6.24% variable rate with a 50% loan-to-value ratio (LVR) on an investment property, I'd be asking exactly what you're asking. It's not outrageous, but in my decades managing rentals, I learned that banks rarely reward loyalty. At 50% LVR, you're a prime borrower, and if the bank won't sharpen the rate, they're probably testing whether you'll actually leave.

Let's break down why that is, and what I'd do step by step if I were in your shoes.

First, a quick definition check

Your LVR is simply the loan amount divided by the property's current value. A 50% LVR means you owe half of what the property is worth — you've got a lot of skin in the game. For a lender, that's about as safe as it gets. You're well below the 80% threshold where lenders mortgage insurance (LMI) is typically required, so you're low-risk, high-equity, and exactly the kind of borrower every bank wants on their books.

A variable rate means your interest can change with the market. In Australia right now, investment loans often carry a premium over owner-occupied loans, but 6.24% is on the higher side for a 50% LVR. I'm not a mortgage broker, but from what I've seen, plenty of lenders are offering investment rates in the low-to-mid five per cent range for borrowers with that much equity. So yes, your rate likely has room to come down.

Why the bank is probably testing you

Here's the uncomfortable truth I've learned the hard way: banks count on inertia. They know most borrowers won't go through the hassle of refinancing, so they'll keep your rate a little higher and pocket the difference. It's called the loyalty penalty, and it's real.

When I had my own portfolio, I'd review every loan at least once a year. If my rate drifted more than a quarter per cent above what new customers were getting, I'd pick up the phone. Sometimes a simple call to the retention team was enough. Other times, I had to go further.

What I'd do first: gather your ammunition

Before you call anyone, get a real, written offer from another lender. I'd talk to a good mortgage broker — they do this every day and know which lenders are actually competitive for investment loans with your LVR. You can also check online comparison sites, but be careful: the headline rate isn't the whole story. Look at the comparison rate, which includes most ongoing fees, so you can compare apples to apples.

Tell the broker your situation: investment loan, 50% LVR, currently 6.24% variable, and ask what rate you could get if you refinanced today. Ask about upfront costs too — application fees, valuation fees, discharge fees from your current lender. You want the full picture.

Step two: make the retention call

Once you have a better offer in writing, ring your current bank and ask to speak with their retention or customer save team. Be polite but clear: 'I've been offered X by another lender. I'd rather stay, but only if you can match or beat it. If not, I'd like to start the discharge process.'

This is where the magic often happens. I've had banks suddenly find a 'special discretionary discount' that wasn't available five minutes earlier. One time, my bank offered to cut my rate by half a per cent and waive the next year's annual fee just to keep me. But I've also had banks shrug and say 'sorry, that's the best we can do.'

What if they still won't budge?

Then you follow through. Ask for a discharge authority form. This is the document that tells your bank you're leaving. In my experience, the moment the discharge team gets involved, the retention team often calls back with a better offer. It's a classic last-ditch save.

If they don't, you proceed with the refinance. Since you're on a variable rate, there are usually no break costs, though there will be a discharge fee — typically a few hundred dollars. Your new lender may offer cashback or cover some costs, but don't let a sweetener blind you to a higher ongoing rate. The goal is the best total cost over the next few years, not a quick perk.

The real cost of doing nothing

Here's the part that stings. Even a small rate difference adds up. On a $400,000 loan, half a per cent is $2,000 a year. Over five years, that's $10,000 you've handed to the bank for no reason other than not wanting to fill out forms. And at 50% LVR, you have the equity to move easily — no LMI, strong serviceability, and plenty of lenders who want your business.

So if your bank won't lower your 6.24%, don't take it personally. It's just business. Gather your evidence, make the call, and be prepared to walk. In my experience, that's the only language banks truly understand.