Mortgage holders have been hit hard by consecutive interest rate hikes from the Reserve Bank of Australia (RBA).
And new analysis has found dozens of lenders have passed on bigger RBA rate hikes to their existing customers than what’s on offer to new ones.
With another RBA hike coming today, the gap between new and existing customer rates is set to blow out even further.
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Big Four bank cuts to their lowest variable rates since May:
CBA two cuts totalling 0.25 per cent
Westpac one cut of 0.35 per cent
NAB one cut of 0.20 per cent
ANZ two cuts totalling 0.25 per cent
As a result, a borrower who took out one of the Big Four banks’ lowest variable rates just six months ago is now on a rate that is, on average, 0.26 per cent higher than what the bank is offering new customers today, the RateCity data found.
That gap widens to 0.67 per cent for the average Big Four customer who took out their home loan two years ago and hasn’t negotiated.
On a $500,000, 25-year loan today, this difference in rate translates to $190 extra in monthly repayments.
RateCity research director, Sally Tindall, said while loyal bank customers are forced to take the RBA rate hikes on the chin, new customers are being offered better deals.
“It’s crazy to think that a customer who took out a loan just six months ago is already being charged significantly more than a new customer today,” Tindall said.
“New customer discounts have picked up steam since the RBA cash rate hikes started. Refinancing is booming as people seek out lower rates and that’s forced the banks to put better rates on the table.”
Tindall said with more RBA hikes expected over the coming months, new and existing customers rates are expected to blow out even further.
“For many borrowers it’s not practical or cost-effective to switch lenders every few months, however, people should at least haggle with their bank every time it offers a better deal to new customers,” she said.
“If you haven’t negotiated with your bank recently, pick up the phone and be that annoying customer.
“Your bank might turn you down, but they also might just say yes.”