The margin between the rates banks charge loyal customers and those they charge to entice new customers has almost doubled since the Reserve Bank of Australia started cutting rates in June
New research shows that the gap in the rate offered to new customers, compared to that charged to existing customers, has blown out to 0.79 per cent, from an average of 0.47 per cent.
The higher rates being paid by existing customers is increasingly called a loyalty tax.
The big four banks control about 80 per cent of the $2 trillion residential mortgage market and a 0.79 per cent loyalty tax could mean as much as $6 billion to the big four banks.
A typical borrower with a $760,000 mortgage is being slugged with an additional $328 a month in repayments, or close to $4,000 a year. By sticking with their current lender
Lenders are competing aggressively to entice Australians away from their established lender. In addition to much lower rates, lenders are offering as much as $2,000 or enough frequent flight points for a London flight to entice you to switch.
If your existing bank is offering you no loyalty, why should you offer your bank any loyalty?
If you want to talk more about how you can avoid the loyalty tax by getting a better rate from a new lender, please contact your Origin broker now.