Home loan borrowers advised to review interest rates every six months

Borrowers are encouraged to review their home loan rates every six months to avoid a “loyalty tax,” where existing customers pay significantly higher rates than new clients. Regular reviews allow homeowners to account for shifts in the Reserve Bank rate cycle, lender repricing, and improvements in their loan-to-value ratio due to repayments or rising property values.

While a 0.50 per cent rate difference can save approximately $190 a month on a typical Western Sydney loan, switching lenders is not always beneficial. Borrowers must weigh potential savings against break costs for fixed rates, switching fees, and the potential need to pay lenders mortgage insurance again if equity is below 20 per cent.