Lender Loyalty May Be Costing You Thousands
Many people think that by being a loyal customer they will get ‘looked after’ or even preferential treatment. However, when it comes to your bank, nothing could be further from the truth.
The margin between the interest rates that lenders are charging loyal home loan customers and what they charge to brand new customers is widening, costing loyal borrowers thousands of dollars in extra repayments each year. Many call it a tax on loyalty, except it’s not the tax office collecting the tax.
This loyalty tax has increased to an average 58 basis points, or 0.58%, and in some cases it’s even higher. This is despite an Australian Competition and Consumer Commission Report released late last year warning many long term home loan borrowers are paying far more than they could be, if they were prepared to shop around for a better deal.
Borrowers with an average $400,000 loan are potentially paying over $2,300 more in interest per annum, compared to what is being offered to new borrowers. The ACCC report also noted that those who had had their loans for more than 10 years may be paying up to 104 basis points, or 1.04% more, equating to an extra $4,160 more in interest per annum.
Whether it’s from being time poor or just laziness, Australians tend to not be very good at shopping around for a better deal. But when it comes to your home loan, the return on that little bit of effort can be enormous.
If you have had your home loan for more than two years, have recently, (or about to come off a fixed interest rate) or you just want to know whether there’s a better deal out there – give us a call. Within a few minutes our mortgage brokers will be able to work out whether your current home loan is competitive in the market or whether there’s a better deal out there that could save you thousands.
Call Bernie Lewis Home Loans on 8300 8300 or email info@bernielewis.com.au and speak with one of our experienced mortgage brokers to see if we can put more of your hard earned money back into your pocket in 2022.
