March 12, 2026
Loyalty is usually a good thing. But when it comes to your home loan, staying with the same lender for too long without reviewing your options could mean you’re paying more than necessary.
Many borrowers are unaware of something known as “loyalty tax.” This occurs when existing customers gradually end up paying higher interest rates than what lenders advertise to attract new borrowers.
With interest rates remaining a key focus in 2026, now can be a good time to review your home loan and ensure your rate and loan structure remain competitive.
What Is Loyalty Tax?
Loyalty tax refers to the extra cost some borrowers pay simply by staying with the same home loan provider over time.
To attract new customers, lenders often promote discounted interest rates or special offers. However, these offers are not always automatically applied to existing borrowers.
As a result, long-term customers may find themselves paying a higher interest rate than someone who has just taken out a new loan with the same lender.
In some cases, the longer you remain with one lender without reviewing your loan, the more a loyalty tax can creep in.
Interest Rates and Why Reviews Matter
While Reserve Bank decisions often dominate headlines, lenders regularly adjust their own interest rates and policies throughout the year.
Because of this, reviewing your loan periodically can help ensure your rate remains competitive and your loan structure still suits your needs.
Even a small difference in interest rates can make a significant difference over the life of a loan.
When Should You Review Your Home Loan?
Some common reasons borrowers review their home loan include:
If you haven’t reviewed your home loan in the past 12–24 months, it may be worth taking another look.
What To Do If You Might Be Paying Loyalty Tax
There are a few ways to check whether your loan is still competitive.
Compare Rates
Start by checking how your current interest rate compares with the rates your lender is advertising to new customers.
Request a Lower Rate
In some cases, lenders may offer discretionary discounts to existing customers who ask.
Having a strong credit history and a lower loan-to-value ratio can strengthen your negotiating position.
Consider Refinancing
If a more competitive option is available, refinancing could allow you to move to a better rate or access new features and benefits.
Refinancing is often simpler than people expect. Unlike purchasing a property, there is typically no contract of sale or real estate agents involved.
Reviewing Your Loan Could Save You Money
Home loans should not be something you simply “set and forget.”
Regularly reviewing your mortgage can help reduce the risk of paying a loyalty tax and ensure your loan continues to support your financial goals.
If you would like to review your home loan or explore refinancing options, our Finance Broking team can help compare lenders and run the numbers so you can make an informed decision.
