8/10/2026
Loyalty can be valuable in many parts of life. With a home loan, however, remaining with the same lender does not necessarily mean you will continue to receive its most competitive pricing.
The difference between what a long-standing customer pays and what may be available to a new or more active borrower is often called a ‘loyalty tax’. It is not an actual tax or a separate fee. It is the additional interest a borrower may pay when their existing rate becomes less competitive and the loan is left unchanged.
Not every long-standing borrower is paying too much. Some existing customers have already negotiated strong discounts, and the gap between average rates on new and existing loans changes with market conditions, loan type and borrower circumstances.
The point is not to assume that an older loan must be uncompetitive. It is to avoid assuming that loyalty has automatically secured the lender’s best available rate. A home loan that represented excellent value several years ago may not remain the best fit indefinitely.
Lenders compete for new business and may offer sharper rates or discounts to attract new borrowers. They may also offer a better rate to an existing customer who asks them to review the pricing on their loan, particularly if the customer has a strong repayment history or improved equity position.
Meanwhile, other customers simply remain on their existing rate. That can create a difference between the lender’s advertised pricing, the rates negotiated by active borrowers and the rate paid by someone who has not reviewed their loan for some time.
A loan can also become less competitive because:
A fraction of a percentage point may appear minor, but home loans generally involve large balances and long repayment periods. A rate difference that looks modest from month to month can add up to a meaningful amount of interest over time.
The rate is not the whole story, though. Package fees, offset and redraw facilities, repayment flexibility, fixed-rate restrictions and the remaining loan term can all affect the overall value of the loan. The relevant question is not simply whether another rate is lower, but whether the complete alternative is better after costs and features are considered.
You do not need to work through all of this yourself. The Loan Company can review your current rate, fees, features and remaining loan term, then compare them with suitable options available through our lender panel.
We begin by looking at the interest rate actually applying to your loan, along with any annual package fees and the features you use. We can then compare your loan with broadly similar options, taking account of factors such as the loan purpose, repayment type, interest-rate type and available equity.
If your current rate appears uncompetitive, we can approach your lender on your behalf. A pricing review, sometimes called a repricing request, asks whether the lender can reduce the rate or improve the discount without moving the loan elsewhere.
If your existing lender will not offer a competitive outcome, we can explore whether refinancing may leave you better off. Any potential benefit needs to be weighed against discharge and application costs, possible break costs, lenders mortgage insurance, differences in features and the risk of extending the loan term.
A home loan review does not need to end with a change. Your current lender may improve the rate, or the existing loan may already compare well once its features and switching costs are considered. Confirming that the loan still stacks up is a useful outcome in its own right.
Equally, loyalty should not be treated as a reason to accept uncompetitive pricing indefinitely. Your lender may be entitled to charge the rate set under the loan contract, but you are entitled to ask whether a better outcome is available.
The aim is not to move a loan for the sake of it. It is to make sure that staying with the current lender remains an informed choice rather than an expensive habit.
This article contains general information only and does not take into account your objectives, financial situation or needs. Before acting on the information, consider whether it is appropriate for your circumstances. Credit approval is subject to lender eligibility, lending criteria and assessment.
