Rising interest rates means it is more important than ever for borrowers to shop around for a better mortgage deal, as existing lenders won’t bother to offer better deals to existing customers.
Banks have been quick to pass on interest rate rises since May this year and the majority are offering better deals only to new customers or those who are threatening to switch lenders.
In 2020 the Australian Competition and Consumer Commission found bank loyalty didn’t pay and that existing home loan customers typically pay about 0.25 percentage points higher than new borrowers.
New analysis by mortgage broker Finspo, puts the gap between the rates paid by existing customers and new customers now at 0.48 percentage points.
Former ACCC chairman Rod Sims, who is now a researcher at the Australian National University, says: “The mortgage market is about as non-transparent as any market gets. You just do not know what other people are paying for interest on their mortgages.”
In 2020 the Australian Competition and Consumer Commission urged lenders to give its home loan customers of more than three years an annual prompt to see if they could get a better deal but that is yet to occur.
