In an attempt to attract new business, Australian banks are offering new customers competitive rates on home loan packages, but existing customers are not receiving the same treatment.
An RBA released report following the October cash rate cut of 0.25% found that Australian banks cut their standard variable rates for existing clients by an average of 0.19%. In contrast, home loan packages offered to new customers were cut by an average of 0.29%, revealing that deals for new clients are exceeding the cuts made to the RBA’s official cash rate.
Smartline Mortgage Advisers executive director Joe Sirianni revealed that this has come after a significant drop in the number of Australians seeking home loans.
“The competition has heated up for the banks and they are all trying to grow market share while vying for a smaller pool of business. As a result, they’re prepared to ‘sharpen their pencil’ and offer an extremely competitive rate to secure a new customer,” he said.
Sirianni added that the discrepancy between rates for new and existing customers leaves existing customers two options for receiving the best offers possible from Australian banks. The first is to look into becoming a new customer with another lender. The second is to familiarise yourself with the deals being offered to new customers by your current lender and demand the same.