October 27, 2017
Loyal banking customers are being slugged as much as $70,000 extra over the life of their mortgage just for sticking with the same bank, alarming new figures have shown.
Despite the cash rate remaining at a record low 1.5 percent, many lenders are denying loyal customers the same deals they are offering “new” customers, which include significant life-of-loan discounts.
New findings by financial comparison website RateCity have revealed some lenders are now offering rate discounts almost equivalent of five rate cuts – or up to 1.11 per cent off – giving customers rates as low as 3.69 per cent.
This could save the typical Australian mortgage customer, on a standard $300,000 30-year home loan, more than $70,000 in extra interest charges over the life of the loan.
RateCity’s spokeswoman Sally Tindall urged “ideal” home loan customers – owner occupiers with a loan-to-value ratio less than 80 per cent who are paying both principal and interest – to ensure they are not missing out on what new customers can get.
“Existing borrowers should look up what their bank is offering new customers and use that as a bargaining chip to ask for a rate reduction” she said.
“If you have got that evidence in front of you, you will put your bank between a rock and a hard place”.
Many banks are offering owner-occupied deals, fixed and variable below 4 per cent.
The Mortgage and Finance Association of Australia’s chief executive officer Mike Felton said borrowers should review their loans every three to six months.
“Complacency can cost a lot of money; we get so used to seeing the same monthly repayments….each month we tend to lose sight of what the rates and fees are” he said.