Existing home loans customers charged more, study suggests

Wednesday 07 October 2009

Article by Mozo

Recent research has suggested that banks charge existing home loans customers more than new clients.

Conducted by brandmanagement for the Australian, the study claimed people who have already taken out a mortgage are charged a higher variable rate, than that offered to new borrowers.

A survey of nearly 5,000 people found that the four major banks add an extra 29 to 44 basis points on their interest rates.

Representatives from the Commonwealth Bank, Westpac ANZ and National Australia Bank said they were "puzzled" by the claims.

Furthermore, banking analyst Brian Johnson, spokesperson for stockbrokers CLSA, said switching costs and penalty fees put people off looking for better deals and low interest home loans.

He agreed with the results of the research and said financial institutions’ home loan profitability was maintained by existing customers, adding discounts of as much as 75 basis points are often offered to new mortgage seekers.

This news may be of interest to those looking to compare home loans, especially when combined with advice offered by News Limited, which said timing is crucial when buying a new house.

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