You might not realise that banks often charge lower interest rates for new customers than existing customers.

For proof, check out the Reserve Bank’s most recent graph on lenders’ interest rates. The graph is based on July data, so the specific numbers are a bit off as interest rates have risen since then. But what’s completely accurate is the gap between the lower rates paid by new customers (bottom line) and the higher rates paid by loyal customers (top line).

Owner-occupier variable housing rates

In July, owner-occupiers who took out new variable home loans were charged, on average, 0.48 percentage points less in interest.

If you have a home loan, you don’t have to tolerate paying higher rates. Instead, you can refinance to a different lender that will give you the lower ‘new customer’ rate. Borrowers refinanced $17.9 billion of home loans through new lenders in July, which was the second-biggest refinancing month in history.

Many lenders also offer refinance cashback incentives which range from $2,000 - $4,000 to entice new customers. A cashback combined with a cheaper rate could save you thousands on your mortgage and put more money in your pocket.

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