Mortgage holders hit with ‘loyalty tax’, new customers dodge rate rises

A real estate agent drops a set of house keys into a buyer's hand

While customer loyalty is often rewarded, recent trends in home loan rates suggest existing mortgage holders are being passed the buck, while lenders entice new customers with lower rates.  

Data from Lendi reveals that existing home loan customers are being charged rates that are  86 basis points higher on average than the rates newer customers are being offered. 

The difference in interest is even higher for the big four banks – an average 91 basis points.

It’s been dubbed a ‘loyalty tax’ and it could end up costing customers tens of thousands of dollars extra over the life of the loan. 

For example, on a $500,000 home loan, an extra 91bp on your interest rate equates to $70,000 in extra interest being charged.

According to Lendi, this ‘loyalty tax’ is mainly affecting those who have held their home loan with the same lender for a few years. 

Expected cash rate increases may further this rate-divide 

With the official cash rate expected to continue rising, the disparity between existing and new customers may grow larger.

This is cause for concern for home loan customers who are already facing increased financial pressure

But, how do customers know if they’re being charged a higher interest rate? And is there anything they can do to get a better deal? 

First off, customers can compare the interest rate they are being charged with the rate their current lender is offering new customers. If there’s a significant difference, then they’re likely being hit with a loyalty tax. 

Next, a customer can compare home loan rates right now to see how their current rate stacks up with what is being offered. 

What customers can do is create a platform for negotiation with their lender. By working out what they’re being charged, what new customers are being offered, and what the going rates are in the market, they might have steadier ground to stand on when haggling for a better rate. 

To get you started, here’s some of the latest home loan rates available.

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Last updated 10 February 2025 Important disclosures and comparison rate warning*
What are your home loan needs?

Your loan-to-value ratio (LVR): 50%

Loan amount and LVR will affect interest rates.

  • Promoted

    Unloan Variable

    • Owner Occupier
    • LVR <80%
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    5.90 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply online in minutes.

  • Promoted

    Basic Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR<70%
    Interest rate
    5.55 % p.a.
    Fixed 2 years
    Comparison rate
    6.05 % p.a.
    Initial monthly repayment
    $2,855
    Go to site

    No upfront or ongoing fees. Free extra repayments and redraw facility. Fast approval times. Min 30% deposit required. Borrow up to $10,000,000.

  • Promoted

    Variable Home Loan 90

    • Principal and Interest
    • LVR <90%
    Interest rate
    6.04 % p.a.
    Variable
    Comparison rate
    6.08 % p.a.
    Initial monthly repayment
    $3,011
    Go to site

    Affordable home loan rate for buyers or refinancers. No monthly or ongoing fees. Option to add an offset for 0.10%. Access to savings with unlimited redraws available. Minimum 10% deposit required.

  • Promoted

    OMG Home Loan

    • Owner Occupier
    • Principal & Interest
    • <60% LVR
    Interest rate
    5.99 % p.a.
    Variable
    Comparison rate
    6.02 % p.a.
    Initial monthly repayment
    $2,995
    Go to site

    BCU Bank’s OMG owner occupied home loan offers a variety of great low rates depending on your deposit. Save with no ongoing annual fees. Access your extra payments when you need to through the redraw facility. Pre-approval valid for 3 months.

  • Promoted

    Offset Home Loan

    • Fixed
    • Owner Occupier
    • Principal & Interest
    • LVR <70%
    Interest rate
    5.55 % p.a.
    Fixed 2 years
    Comparison rate
    6.28 % p.a.
    Initial monthly repayment
    $2,855
    Go to site

    Convenient offset account. No upfront or ongoing fees. Free extra repayments and redraw facility. Fast approval times. Min 30% deposit required. Borrow up to $10,000,000.

  • Promoted

    Basic Variable Home Loan

    • Owner Occupier
    • LVR <60%
    Interest rate
    6.13 % p.a.
    Variable
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $3,040
    Go to site

    Competitive interest rate. No ongoing monthly loan maintenance fees. You can redraw your repayments if you’re ahead. Choose to repay weekly, fortnightly, or monthly. Make extra payments without penalty, to pay off your home loan even faster.

  • Promoted

    Fixed Rate Home Loan

    • Owner Occupier
    • Principal & Interest
    Interest rate
    5.74 % p.a.
    Fixed 2 years
    Comparison rate
    6.16 % p.a.
    Initial monthly repayment
    $2,915
    Go to site

    Secure a low rate and enjoy the certainty of repayments, with the BCU Fixed Rate Home Loan. Save with no ongoing annual fees. Pay up to $25,000 extra during a fixed period (T&Cs apply). Lock in for up to 5 years.

  • Promoted

    Fixed Rate Home Loan

    • Owner Occupier
    • LVR<80%
    Interest rate
    5.74 % p.a.
    Fixed 2 years
    Comparison rate
    6.21 % p.a.
    Initial monthly repayment
    $2,915
    Go to site

    Get repayment security with fixed rates from one to five years. Free extra repayments of up to $25,000 during the fixed rate period. Fix a portion of your loan and leave the rest variable. Choose to repay weekly, fortnightly, or monthly.

  • Promoted

    Intro Discounted Standard Variable Rate

    • Owner Occupier
    • Principal & Interest
    Interest rate
    6.20 % p.a.
    Variable for 12 months and then 6.60% p.a.
    Comparison rate
    6.56 % p.a.
    Initial monthly repayment
    $3,191
    Go to site

    Enjoy a discount of 0.40% p.a. applied for the first 12 months of the loan. No application, account or establishment fees to pay to help pay. Make additional repayments without being penalised. Other fees may apply. 20% deposit required.

  • Promoted

    Fixed Home Loan

    • Owner Occupier
    • Principal & Interest
    • LVR <95%
    Interest rate
    5.69 % p.a.
    Fixed 2 years
    Comparison rate
    6.20 % p.a.
    Initial monthly repayment
    $2,899
    Go to site

    Get the security of a competitive fixed rate home loan for 2 years with IMB. Get up to $4,000 cashback (T&Cs apply). Up to 12 months repayments in advance without penalties. Free Internet and Mobile Banking redraws (T&Cs apply). Up to a 30 year loan term. Split loan available. No offset account.

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* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.

** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.

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