Why loyalty to your bank doesn't always pay

Loyal home loan customers are being overlooked in the latest round of interest rate cuts, as lenders offer special discounts to new customers only.

RateCity.com.au data shows several lenders, including AMP Bank, Beyond Bank, Click Home Loans, IMB, Mortgage House and Suncorp Bank have introduced special offers for new lending only, which cuts their rates by as much as 0.45 percentage points.

On a $300,000, 30-year loan, that’s $81 extra a month or $972 a year.

Sally Tindall, money editor at RateCity.com.au said, “We regularly see exciting new rates come on to the market but when we do a bit of digging, we often discover that they’re for new customers only”.

“Special introductory offers and new low-rate products are designed as a marketing tool to attract new customers, not retain existing ones,” she said.

“It’s not exactly common for a lender to decide to lower an existing customer’s variable rate, except in response to a cut in the cash rate.

“While these rates can often be cracking deals, it’s important to read the fine print, particularly if they’re only for a limited time because you may find that the rate jumps up dramatically after the honeymoon period is over.

“These double standards can feel like a slap in the face for loyal customers, but that doesn’t mean you have to just cop it.  If you are a long-serving customer, find out what rate your bank is offering new customers, because if it’s different, you’ve just got yourself a bargaining chip. 

“It’s also a good idea to use a comparison website to check what the lowest rates on the market are to understand whether you’re getting a good deal before you reach the negotiating table.”

RateCity.com.au shows advertised variable rates start from 3.98 per cent, and 3-year fixed rates from 3.89 per cent. For a full list of mortgage interest rates click here.