If you are blindly sticking with your same lender out of loyalty, you could be one of the many Australians collectively losing over $4 billion a year because of it.
The statistics come from digital lending platform Lendi and they show Australian borrowers are paying more than they could because they either aren’t aware or don’t care enough.
The problem for these borrowers is the banks are happy to keep quiet to keep making more money, it’s in their best interests, so they will often not voluntarily come forward to inform their customers.
But lenders continue to charge lower rates to new customers compared to existing customers to entice new borrowers to join their books.
It’s never been a better time for customers to have a look into their lender and the rate they are being charged with Reserve Bank hikes and rising cost of living pressures.
Lendi CEO David Hyman told Broker News the data shows banks are charging existing customers around 80-90 basis points more than new ones.
“At 91bps you would be saving $70,000 over the life of a loan,” he said.
“This is an eye-popping number and for the most part it’s apathy that’s costing people.
“We encourage homeowners to speak to their broker to assess their options because by shopping around, they can save tens of thousands of dollars.”
“We encourage homeowners wanting to compare the difference and understand potential savings over the life of their individual loans to use free online repayment calculators,” he said.
“By refinancing and saving on ‘loyalty tax’, mortgage holders could potentially reclaim the last two RBA rate increases. Homeowners should speak to their broker to assess their options as a simple conversation with a broker can save thousands per year.”
Mr Hyman said everyone should have a detailed look into their mortgage and hunt for a better deal considering how much money was on the line.
Next year in Australia there are $130 billion worth of loans that are coming off fixed rates so thousands of Aussies will have to start copping higher interest rates now they are on the way up so the earlier the better to look into things.
Aussie mortgage broker Melanie Smith also spoke to Broker News and said the Lendi data proved there were people that are paying unnecessary mortgage costs when they could simply switch loans.
“In the current climate, it’s more important than ever for Australians to avoid unnecessary mortgage stress, so I would encourage mortgage holders to call their local broker to talk through the options that would suit them,” she said.
“It’s amazing how a conversation can turn into real savings for your budget.”