Here's something banks don't advertise: if you've had your home loan for a few years, there's a decent chance you're paying more than a new customer would for the same loan at the same bank.
It's often called the "loyalty tax", and the ACCC has looked into it in its inquiries into home loan pricing.
Why it happens
Lenders compete hard for new customers. Advertised rates and discounts are aimed at people shopping around. Existing customers, who are less likely to move, don't always get those same discounts.
So over time, as a lender cuts rates for new borrowers or adjusts discounts, existing customers can be left on older pricing. When rates rise, increases are applied across the board, so the gap stays.
How much it can cost
On a $600,000 loan with 25 years remaining:
| Rate gap | Extra cost per month | Extra per year |
|---|---|---|
| 0.25% | about $95 | about $1,140 |
| 0.50% | about $190 | about $2,280 |
| 0.75% | about $285 | about $3,420 |
Over several years, even a modest gap adds up to thousands of dollars.
How to check if you're paying it
- Find your current rate on your latest statement or app.
- Look up your own bank's advertised rate for the same type of loan (owner-occupier or investor, principal and interest, similar LVR).
- Compare against other lenders. A broker can do this quickly.
If your rate is 0.30% or more above the best options available to you, you're probably paying the loyalty tax.
What to do about it
Ask your lender for a discount
Call the retention team and say you're considering refinancing. Give them a specific rate you've been offered elsewhere. Many lenders will cut your rate on the spot.
Refinance if they won't move
If your bank won't match, switching is often worth it. For most variable loans, costs are under $1,000 and savings outweigh them within a few months.
Use a broker for annual reviews
Part of what we do at Finfident is review clients' rates every year. If a better deal becomes available, we tell you. Often a phone call to the lender with a competing offer is enough.
Why people stay anyway
- Inertia. It feels like a hassle.
- Fear of being declined. Some borrowers worry they won't qualify elsewhere. That's a fair concern in 2026, with lenders testing at about 3% above actual rates. But you can still negotiate with your current lender without a new assessment.
- Convenience. Having your transaction accounts and loan with the same bank is easy. Most lenders make it simple to switch transaction accounts too.
A quick script
"Hi, I've had my home loan with you since 2021. My current rate is 6.84%. I've been offered 6.24% with another lender for a similar loan. I'd prefer to stay, but I need you to get closer to that rate. What can you do?"
Be polite, specific and willing to leave. Read the full approach in how to negotiate a lower home loan rate.
Frequently asked questions
Is the loyalty tax illegal?
No. Lenders are allowed to price loans differently for new and existing customers, though regulators have pushed for more transparency.
How often should I check my rate?
At least once a year, and after every RBA decision that changes rates.
Will refinancing affect my credit score?
A new application adds an enquiry to your file. One or two refinances over several years is normal and rarely a problem.
Wondering if you're paying the loyalty tax? Call Finfident on 0424 545 654 and we'll compare your rate against the market for free.
This article is general information only and doesn't take into account your objectives, financial situation or needs. Figures, rates and scheme rules are current as at October 2026 and can change. Finfident Finance Brokers (ABN 94 679 280 801) is Credit Representative 569374 of Outsource Financial Pty Ltd (ACN 131 090 705), Australian Credit Licence 384324.