Australian home loan borrowers who are loyal to their banks and lenders are potentially missing out on thousands of dollars in monthly savings and cashback offers, new data from Comprare Club has revealed.
Refinancing enquiries by the personal finance marketplace and advice company found that Australian homeowners on a 6.45% variable rate with one of the big four banks could pocket an average of $404 a month in savings on mortgage repayments if they were shifted to their lender’s best rate.
An eligible homeowner with a $600,000, 25-year principal-and-interest no-fee mortgage on a variable rate of 6.45% could save $476 a month plus receive $3,000 cash back by moving to Westpac’s lowest variable rate of 5.14%, while moving to ANZ could earn them a $406 monthly saving and a $4,000 cashback. The cashback offers aren’t available to existing customers.
“Our first piece of advice to homeowners is always to speak to your lenders and see if they can lower your interest rate, but this data really shows the cost to Australian households who don’t shop around,” said Lance Goodman (pictured above), Compare Club CEO.
“Our brokers are also finding that, for existing mortgage holders, lenders will rarely match the best rate that they’re advertising to new customers unless the homeowner says they’re switching banks. It means that mortgage holders have to often go through long negotiations just to be treated the same as a new customer.”
The Compare Club data also revealed that customers who managed to secure a loan with the best possible variable rate with a big four bank in May 2022, when the RBA first started hiking rates, would still be out of pocket by an average of $168 per month after the cash rate increases less than a year later.
“Sadly, lenders’ loyalty tax starts almost from day one,” Goodman said. “On average, the best rates of the big four should be 0.47% lower than they currently are, if Westpac, ANZ, CBA, and NAB applied the same cash rate to loans for new customers as they did to their existing ones.
“Existing customers who prudently refinanced their loans before the cash rate got too high can feel particularly hard done by. They may still be able to negotiate down to their lender’s lowest rate, but they’re not eligible for cashback offers, even though they’ve been responsible with their finances.
“At a time when Australians are feeling the pain of t10en consecutive interest rate rises, there really is little incentive for mortgage owners to stay with their current lender. This is especially true for the 800,000 homeowners who are moving onto variable rates this year and are likely to get hit with a loyalty tax on top of a massive hike in monthly repayments.”
On average, customers who switched with Compare Club had their interest rate slashed by 0.6%. The personal finance marketplace said it is typically seeing enquiries from refinancers with rates ranging from 5.8% to more than 7%.
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