The Truth About Lender Loyalty: Why Staying With Your Bank Might Be Costing You
Many Australians remain with the same bank for decades, trusting that loyalty will be rewarded. But when it comes to your home loan, sticking with your bank could be quietly costing you thousands. In 2025, as loyalty tax remains widespread across the lending market, it’s more important than ever to review your mortgage and understand what else is out there.
What Is the ‘Loyalty Tax’?
Loyalty tax refers to the higher interest rates long-term borrowers often pay compared to new customers. Lenders frequently offer sharp deals to attract new clients while allowing existing borrowers’ rates to creep higher over time. It’s one of the biggest silent costs in lending.
According to RBA data, new mortgage customers often receive rates 0.4% to 0.6% lower than existing customers. That difference can add up to tens of thousands in extra interest over the life of a loan.
Why Does It Happen?
- Banks assume you won’t switch — and many borrowers don’t
- Introductory offers entice new customers, but aren’t always passed on to existing clients
- Without regular reviews, your rate can quietly drift upwards
How to Tell If You’re Paying Too Much Ask yourself:
- Has it been more than two years since you reviewed your home loan?
- Are you still on the same rate you started with?
- Do you know your current rate off the top of your head?
If you answered ‘yes’ to any of these, there’s a strong chance you’re paying too much.
How a Broker Can Help
A mortgage broker compares multiple lenders on your behalf and negotiates with your current bank if switching isn’t ideal. We’ll tell you honestly whether refinancing makes sense, or whether a simple rate negotiation could save you money.
Lender loyalty doesn’t always pay. With the right advice and some strategic pressure, you could shave years off your loan and redirect those savings toward your future. Let The Brokerage show you what’s possible.