Are you too loyal for your own good The banks think so

The loyalty tax has left three-quarters of borrowers feeling "ripped off" and "mad," with the average Australian homeowner paying more than $37,000 in extra interest over the life of their home loan.

Exactly how much do you have to pay in terms of loyalty?

The Reserve Bank of Australia (RBA) confirmed this last year in a study that borrowers with older mortgages are often charged a higher interest rate than borrowers with new loans.

Because the banks don’t believe you’re paying attention, they only give their lowest rates to new customers to get them to sign up.

The average difference in home loan interest rates between new and current owner-occupier borrowers was 0.46 percent, according to RBA data from June 2021.

A 30-year loan with a 0.46 percent difference means a borrower would pay an additional $37,462 in interest over the life of the loan if the loan was $400,000 in size.

Per household, that’s $1,249 per year.

According to a study by Athena Home Loans, this costs Australian households a total of $9.1 billion every year.

Borrowers are enraged and feel cheated.

According to a poll of 1,000 homes conducted by CoreData and commissioned by Athena, 91 percent of borrowers want new and existing customers to receive the same rate.

“Ripped off” (82%) is the most common response, followed by “mad” (74%), and “outraged” (72%) are the most common reactions to this egregious pricing behavior.

“We are well aware that the foundation of trust is openness. For those lenders with clear pricing and a simple value proposition, there is a lot of room for growth,” says Andrew Inwood, CEO of CoreData Global.

You don't have to feel enslaved.

In December 2020, the ACCC released a study with several recommendations on how to stop this unethical conduct, but nothing has come of it since.

More than half of those polled in the CoreData analysis say they feel imprisoned in their present agreement, while one-third (36%) of those surveyed said they approached their lender for a lower interest rate but were turned down.

However, there is a lot of competitiveness among the competitors.

However, with so much competition among lenders right now, it’s critical to understand that you have control over your finances.

“At the moment, rates are at an all-time low, so it’s a critical time when Australians, not banks, need the money in their pockets,” says Nathan Walsh, CEO, and Co-Founder of Athena.

In addition, the RBA states that “borrowers who are well-informed have been able to negotiate a higher reduction with their current lender without having to renegotiate their loan.”

We don't charge a royalty fee.

Around here, we like to reward loyalty. We’ll always have your back.

Please contact us immediately if you haven’t refinanced in a while and we’ll work with you to help you save thousands of dollars in interest payments.

To learn more, contact Premium Finance Group Australia at (07) 4720 8888 or email us at

Disclaimer: The content of this article is general and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your situation and may not be relevant to circumstances. Before taking any action, consider your particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced, or republished without prior written consent.

Contact Us

Schedule your free 15-min call with an advisor

Let us know how we can help below.