Loyal bank customers lose out on rate deals

LOYAL banking customers are being slugged as much as $70,000 extra over the life of their loan just for sticking with the same bank, alarming new figures have shown.

Despite the cash rate remaining at a record low 1.5 per cent, many lenders are denying loyal customers the same deals they are offering “new” customers, including significant life-of-loan discounts.

New findings by financial comparison website RateCity have revealed some lenders are offering rate discounts almost equivalent to nearly five rate cuts — or up to 1.11 per cent off — giving customers rates as low as 3.69 per cent.

This could save the typical Australian mortgage customer on a standard $300,000, 30-year home loan more than $70,000 in extra interest charges over the life of the loan.

RateCity’s spokeswoman Sally Tindall urged “ideal” home loan customers — owner occupiers with a loanto-value ratio less than 80 per cent who are paying both principal and interest — to review the deals and ensure they are not missing out on what new customers can get.

“Existing borrowers should look up what their bank is offering new customers and use that as a bargaining chip to ask for a rate reduction,’’ she said.

“If you have got that evidence in front of you, you will put your bank between a rock and a hard place.”

Many banks are offering owner occupier deals — both fixed and variable — below the 4 per cent mark and customers are being urged to pounce on these deals.

The Mortgage and Finance Association of Australia’s chief executive officer Mike Felton said borrowers should review their loans every three to six months.