The loyalty tax Is back: Banks are cutting rates for new customers while existing borrowers wait

CBA, ANZ, Westpac and Macquarie have all lowered variable rates for new customers since June, according to a report published by ABC News. This is happening at the same time economists expect the RBA to raise the cash rate again, either at its 29 September meeting or in November.

That’s the loyalty tax in action: new customers get cheaper deals, while existing borrowers face a rate hike.

It’s not a fee. It’s a gap.

Banks often offer lower rates to attract new customers. But existing borrowers don’t always get the same deal unless they ask.

The longer you stay with the same lender without checking your rate, the easier it is for that gap to grow without you noticing.

A mortgage broker quoted by the ABC put it simply: banks tend to reserve their sharpest rates for new customers, rather than people who have already signed up.

There’s no conspiracy here. It’s simply how banks compete for new business. The lender trying to win your mortgage has a reason to offer you a sharper rate. Your existing lender already has your loan.

“We see this pattern every rate cycle,” says Pravin Mahajan, Bheja’s Founder and a licensed broker. “A bank cuts its new-customer rate to win market share. Unless an existing borrower asks for a better deal, that gap can just sit there.

“Most people only find out when they compare their rate with a friend, or see what another bank is offering.”

The timing matters.

If the RBA raises the cash rate on 29 September or in November, borrowers already paying an uncompetitive rate could be hit twice. Their rate could rise with the RBA, while they may already be paying more than their lender’s current offer to new customers.

That existing gap can make the impact of another rate rise even harder to absorb.

Start by checking your current rate against what your lender is offering new customers with a similar loan type and LVR.

If there’s a meaningful difference, call your lender and ask if they can give you a better rate. You may not need to refinance at all.

The tricky part is remembering to check.

When banks cut rates for new customers, your lender isn’t necessarily going to tell you that you could be paying less. You have to look for the gap yourself.

This is the kind of gap Bheja’s Health Check is designed to help you spot.

Enter your loan details and you can see how your rate compares with current market rates. It takes less than 60 seconds.

If you connect your loan, Bheja can then keep an eye on your rate over time. So you don’t have to remember to check every few months.

If the gap between your rate and current market pricing becomes significant, Bheja can flag it for you. You can then decide whether it’s worth asking your lender for a better deal or looking at other options.

The conversation with your bank is still up to you. Or, if you prefer, you can speak to Pravin and have a broker help you negotiate.

The point is to make sure a rate gap doesn’t go unnoticed for months or years simply because you forgot to check.

If you haven’t reviewed your home loan rate in the past year, this week’s news is a good reason to take another look.

Check your rate against current offers. If there’s a meaningful gap, ask your lender if they can do better before the next RBA decision, rather than waiting until after a rate rise.

If you’d rather have a broker handle the conversation, you can book an obligation-free chat with Pravin, Bheja’s broker.