What’s your bank loyalty worth? The better part of $5 billion a year. Well that, of course, is what it’s worth to the banks – what it’s theoretically costing existing customers who don’t shop around.
What it quantifies for the first time is how much more banks are prepared to discount interest rates for new customers, compared with what they charge their existing, loyal customers.
The RBA’s analysis of the securitisation numbers clearly shows how keen the banks are to attract new mortgages. The average outstanding loan is itself at a substantial discount to the advertised rates, but new loans – those taken out over the past three months – are more than 30 points cheaper again.
The bottom line is that, on average, we end up paying about as much as the RBA wants us to pay for money. To make up the average though, people on higher incomes with bigger loans who shop around pay substantially less than trusting, loyal customers
While investor loans are more expensive than those for owner-occupiers, the discount offered for new business remains attractive.