Borrowers who remain loyal to lenders could pay thousands of dollars more a year than they need to, according to a review of major bank lending rates.
RateCity is warning homeowners not to fall victim to a “mortgage loyalty tax” by staying with current lenders, who are offering new borrowers better deals than existing customers.
The financial comparison site found all four major banks are offering new customers a significantly lower variable rate than existing customers.
It found a borrower who took out a variable rate loan in September 2019 could be paying an interest rate which is almost a full percentage point higher than a new customer today.
It estimates a Commonwealth Bank customer taking out a $500,000 loan three years ago would have paid an extra $5,100 in interest if they had not negotiated a better rate with the bank because during that time the bank offered discounts five times to new customers.
While the major banks have passed on the new rate rises to existing customers since May they are still offering discounts to bring in new business.
RateCity research director Sally Tindall says banks are “falling over themselves” to offer discounts and perks to borrowers willing to move from a competitor.
