Did you know the average Australian homeowner is paying more than $37,000 in extra interest over the life of their home loan due to ‘loyalty tax’?
Loyalty Tax is this sneaky trick where borrowers with older mortgages are typically charged a higher interest rate than borrowers with new loans.
It’s even been confirmed in a study by the Reserve Bank of Australia (RBA).
You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates to new customers, in a bid to win them over.
For example, RBA June 2021 figures show the average difference in home loan interest rates between new and existing owner-occupier borrowers was 0.46%.
On an average loan size of about $400,000, that 0.46% difference on a 30-year loan means a borrower would pay an additional $37,462 in interest over the life of the loan.
That’s $1,249 per year, per household.
The ACCC published a report in December 2020 with several recommendations to prevent this unfair practice, but nothing much has come of it since.
But with competition among lenders quite fierce right now, it’s important to know the power is in your hands.
Rates are on the increase, so it’s crucial to ensure the money is in your pocket, not the banks.
And we can help you do that!
Contact our team today and we can have a Property Finance Specialist take a look at your situation and ensure you’re getting the best deal available in the market.