Long-term home loan customers paying ever-high ‘loyalty tax’

1 min read

Long-term home loan customers paying ever-high ‘loyalty tax’

You might not realise that lenders often charge lower interest rates to new borrowers compared to existing customers.

Over the past year, as the graph from the Reserve Bank of Australia shows, this gap has widened.

Back in October 2020, owner-occupiers who took out new variable loans were charged, on average, 0.32 percentage points less than existing borrowers. By October 2021, this gap had grown to 0.37 percentage points.

If the RBA increases the cash rate next year, as many economists predict, it will be interesting to see if this gap widens or narrows as lenders bid to undercut their rivals and grab more market share.

Want a better rate? Get in touch.

Hit the button below to arrange a conversation with one of my loan specialists to find a deal that’s best for your situation.

We partner with over 50 lenders so you can find the perfect solution

Do you have questions about mortgages or loans?

Ask us in the comments below