A report from the productivity commission has accused Australia’s ‘big four’ banks of gouging their loyal customers by charging them higher interest rates than new customers.
Recently the amount of interest people have been paying on their mortgages has increased by far more than the rate of inflation.
This occurred even though the Reserve Bank’s benchmark cash rate hasn’t changed in 16 months.
The reason is that last year the industry regulator, the Australian Prudential Regulation Authority (APRA), instructed banks to limit the number of interest-only mortgages they issued. The banks did this by increasing interest rates on interest-only loans.
However, they didn’t just raise rates on new loans, but on existing loans as well.
When it comes to banking, Australians seem reluctant to shop around for the best deal.
Half of us still bank with our first bank, and one outcome is that we end up accepting interest rates on home loans that are up to 0.4% higher than the rates offered to new customers. Over the life of a loan, that can add up to some big dollars.
If your bank rewards your loyalty by upping your interest rate, maybe it’s time to refinance at a lower rate. Shore Financial’s mortgage brokers can compare hundreds of loans from dozens of lenders to help you find a better deal. Why not give us a call and see what you can save on your interest payments?