3 Reasons Some People Get Cheaper Interest Rates
From Aaron’s YouTube: “3 reasons why people get cheaper interest rates #newzealand #firsthome #kiwisaver ##nzfirsthome”
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Posted 28 April 2025
The short version
- Borrowers with 20%+ deposits get lower rates than those with smaller deposits.
- Bank employees and some corporate staff get special staff discount rates.
- Rate negotiation can shave a tiny margin, but structure has far bigger savings potential.
- Poor structure (like fixing everything long-term) can cost more in break fees than a small rate discount saves.
Why your deposit size affects your rate
The biggest factor in your mortgage rate is often your deposit size. Banks view loans over 80% of the property value (less than 20% deposit) as higher risk, so they charge a premium rate to offset that risk. For the same property, someone with a 20% deposit will always qualify for lower rates than someone with 10%.
This isn't about fairness — it's simple risk pricing. But it's why first home buyers should run the numbers both ways. Sometimes waiting to save more costs less long-term than jumping in with a low deposit and higher rate.
The hidden discounts most can't access
Some borrowers get lower rates simply because of who employs them. All banks offer staff mortgage discounts, and many large employers negotiate similar deals for employees. These are genuine discounts off standard rates, but only available to a minority.
If you work for a bank, major corporate, or government agency, check your HR policies. Some employers make this perk hard to find. For everyone else, there's no backdoor — you're comparing standard market rates.
Why structure beats a 0.05% rate cut
Before obsessing over a tiny rate discount, Aaron says to look at your loan structure. Fixing everything for five years right before rates drop could cost tens of thousands in break fees — more than years of a slightly better rate would save.
Smart structure — like splitting loans, using offset accounts, or staggering fixed terms — lets you adapt to rate changes without penalty. That flexibility often saves far more than the 0.05%-0.10% you might grind out of a bank manager.
This is general information, not personalised financial advice. For advice on your situation, talk to Aaron.
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