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Home Loan Variable: 5.94% (5.95%*) • Home Loan Fixed: 5.79% (6.39%*) • Fixed: 5.79% (6.39%*) • Variable: 5.94% (5.95%*) • Investment IO: 6.14% (6.58%*) • Investment PI: 5.99% (6.61%*)

How to Avoid Paying the Loyalty Tax



Stop Paying More For Being Loyal, Avoid Paying the Loyalty Tax!


We are all taught that businesses should reward their most loyal customers. Stick with them through thick and thin and they’ll look after you… Sadly one sector that seems to have ignored this piece of advice is our own banks – they’re actively taking advantage of their existing customers.

The industry refers to this as the Loyalty Tax. Yes – people are paying extra for their loyalty.

One industry group noticed that a major bank offered a .93% discount for their new customers that they weren’t offering to their existing customers.

You might say “That’s only .93% Patrick” and you are right. Bear in mind that there is a principal to this issue – your loyalty should be rewarded not punished… and that .93% represents actual money that could be going to pay off your home faster or at the very least is an extra dinner out once a month.

The same industry group calculated that this bank’s loyalty tax between 2019 and now works out at $1,700 per year. Can you think of something that you could do today that would put an extra $8,500 in your bank account 5 years from now?

What’s really annoying is the loyalty tax is what is funding the ‘great rates’ that the other banks offer.

How To Avoid Paying The Loyalty Tax.

There are two ways to avoid paying the loyalty tax – one of the things I do with my clients is make sure that the lender is aware that we know when they are charging Mortgage World Australia clients the loyalty tax and if they don’t bring our clients back in line with what they can get elsewhere, we will be recommending that they refinance to a lender offering a lower interest rate.

Sometimes the lender does their job and gets the client onto a fairer deal. Other times we have to do what many other Australians are now regularly doing – we refinance them to a different lender who has a considerably better offer than the one they are on now.

The single biggest reason why so many people pay the loyalty tax is because they think it is easier than putting in a refinance application. More times than I care to mention, I’ve shown a client the savings and they’ve just felt like it wasn’t worth the effort to save $1,700 per year for example.

Do yourself a favour and make sure you aren’t paying the loyalty tax. Mortgage World Australia takes pride in helping its clients avoid paying the loyalty tax call 1300 661 211 or enquire online at to have your loan reviewed and see what your options are.

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