The gap between home loan interest rates being offered by the major banks and the rest has effectively doubled according to comparison website Mozo.
The gap between the two was around 0.25 percentage points 12 months ago, and after the majors lifted their rates recently the difference now sits at around 0.53 percentage points.
The growing difference could stimulate customers to actively shop around in the highly competitive mortgage market and in turn bring down rates across the board.
According to Clancy Yeates in Fairfax Media, Aussie Home Loans are already reporting anecdotal evidence of mortgage brokers refinancing an increasing number of home loans, but that won’t be made official until the figures come out.
Mozo’s database has the average standard variable interest rate from the non-big four lenders sitting at 5.08 per cent, compared to the big four’s average of 5.61 per cent.
That means if you have a home loan with either Commonwealth, ANZ, Westpac or National for a $300,000 property you are paying around $90 more a month in repayments than if you were with the other smaller lenders.
Clancy Yeates points out in Fairfax Media that the figures aren’t that black and white as each loan is different and may feature discounts but the figures are off advertised prices and that’s a good benchmark to use regardless.
Smaller lenders have to this point largely resisted the move to follow the majors in hiking their rates and could be on the receiving end of a larger part of the market share as a result.