This week, the Reserve Bank of Australia (RBA) produced research showing “older loans typically have higher interest rates than new loans.”
Typically the difference was 0.4 per cent – on a $500k loan that equates to paying an extra $2,000 interest payments a year.
The RBA concluded “existing borrowers who are able to refinance with another lender or negotiate a better deal with their existing lender can achieve interest savings.”
And the RBA also found that the discounts the banks were offering on their advertised Standard Variable Rates have grown, “widening from around 100 basis points in 2015 to more than 150 basis points in 2019.”
“By increasing the discounts on rates for new or refinancing borrowers over time, rather than lowering SVRs, banks are able to compete for new borrowers without lowering the interest rates charged to existing borrowers”, said the RBA
So, if the Reserve Bank says you are paying too much interest, call your mortgage broker for a better rate.