The Reserve Bank Governor has today urged loyal mortgage customers to “shop around” to get a better home loan rate.
In a speech today, RBA Governor Philip Lowe pointed to new RBA and APRA data that shows owner occupier home loan customers who have been with their bank for four or more years are paying an average variable rate of 3.64 per cent, while new customers are paying an average of 3.23 per cent.
Analysis from RateCity shows that 0.41 per cent rate difference on a $400,000 home loan adds up to $1,634 extra in interest in the first year.
Average mortgage rates
|Loan Type||Average existing customer rate||Average new customer rate||Difference|
|Owner-occupier - all loans||3.64%||3.23%||0.41%|
|Owner occ, principal & interest||3.57%||3.18%||0.39%|
|Owner occ, interest only||4.25%||3.76%||0.49%|
|Investor - all loans||4.02%||3.62%||0.40%|
|Investor, principal & interest||3.88%||3.51%||0.37%|
|Investor, interest only||4.27%||3.79%||0.48%|
Source: RBA housing lending rates
Difference in interest between new owner occupier customer rates and existing customer rates
|Loan size||Extra interest paid in first year|
Note: Rates are based on a new customer rate of 3.23% and an existing customer rate of 3.64% as provided by the RBA. Calculations are based on someone paying principal and interest over 30 years.
RateCity's research director Sally Tindall has welcomed the Reserve Bank’s decision to arm mortgage holders with this new information, which will be released every month.
“It’s great to see the RBA shining the spotlight on the mortgage loyalty tax,” she said.
“Although loyalty is an admirable trait, when it comes to your home loan, it often doesn’t pay off.
“If you’re on variable rate and haven’t negotiated your home loan recently, there’s every chance you’re paying more than a new customer.
“Don’t put up with overpaying, call your bank and negotiate a better rate. If they refuse to budge, you can always take your business elsewhere, especially if you are on a variable rate.
“Variable rates start as low as 2.69 per cent and there are more than 30 lenders offering variable home loan rates below three per cent,” she said.
Lowest advertised variable home loan rates in RateCity database
|Reduce Home Loans||2.69%|
|Freedom Lend / Pacific Mortgage Group||2.79%|