Rates up to 90 bps higher for existing home loans
Long-term borrowers are paying up to $70,000 more in repayments than first-time customers, according to new figures released by the broking group.
According to Lendi’s data, which compared “back book and front book data”, new customers were, on average over June, paying rates that were 86 bps lower than those of existing customers.
Over the past 12 months, this difference has oscillated between 69 bps and 90 bps.
For new customers with the big four banks, this figure jumped to 91 bps lower over the same month, marking the largest gap in rates since October 2021.
The impact of this difference, according to Lendi’s calculations, can cost existing borrowers over $70,000 in payments.
According to the broking group, the total repayment difference between a 25-year, $500,000 loan at 2.39 per cent and 3.25 per cent is an extra $66,329 for the latter.
Between 2.34 per cent and 3.25 per cent, this figure jumps to $70,072.
For the most part it’s apathy that’s costing people. We would encourage mortgage holders to speak to their broker to assess their options. Monitoring and shopping around could save tens of thousands of dollars.
Refinancing and saving on their ‘loyalty tax’, homeowners could potentially reclaim the last two Reserve Bank of Australia rate increases.
Interest rates will likely continue to be passed on in quick order and successively and we want people to avoid unneeded mortgage stress, particularly in the current climate of high cost of living.
This is especially important with low fixed rates starting to expire or be up for renewal next year. That could mean thousands of homeowners that might not be feeling the pinch now but need to be preparing for that change to come through next year.
Recent data has suggested that lenders are not only failing to encourage refinancing but are actively attempting to prevent borrowers from doing so – with many lenders refusing brokers from submitting a discharge online and even requesting customers contact the lender directly before allowing them to leave their existing lender as well as a last-ditch effort to retain them.
Warm regards,