Why Your Bank Charges You More Than Its New Customers

Two prices inside every bank

Lenders effectively run two books. The front book is new business: borrowers who are shopping around and can walk to any lender in the market, so the rate has to win. The back book is everyone who has already signed. Those borrowers aren't shopping, so there is far less pressure on what they pay. Over time the two drift apart. Your rate may have been sharp the day you settled, but the market keeps moving and your loan doesn't move with it unless someone asks. Your lender has no obligation to tell you the gap is there.

What I saw from the inside

Before I started broking, I spent three years as a credit analyst for a mortgage broker, checking loan files before they went to a lender. Plenty of those files were refinances, and the pattern was hard to miss: an existing loan sitting well above what the same bank was writing that week for someone new. Not a riskier loan. Not a weaker borrower. Just an older loan that nobody had looked at in a while.

Who is most likely to be paying too much

• You went straight to your bank for the loan and haven't reviewed it since.
• It's been two years or more since you compared your rate against what's on offer now.
• Your loan has been through several rate changes and you've never asked for a review.
• You've paid the balance down or your property has gone up in value, which can put you in a cheaper pricing tier than the one you started on.
• You hold an investment or interest-only loan, where the gap between old and new pricing is often wider.
• You were repriced once before, but it was more than six months ago.

How to check where you stand

You need three things: who your loan is with, roughly what you owe and the rate you're on. The rate is on your latest statement or in your banking app. With that, I put your number next to what your own lender is currently writing for new customers, and next to the lenders on my panel, including the non-bank lenders that tend to price sharper because they have to compete harder. A comparison isn't a credit application, so nothing touches your credit file at this stage, and nothing is lodged until you say go.

The three possible outcomes

Sometimes you're already competitive. I tell you that and you get on with your day, which is a good result: you know instead of wondering. If there's a gap, the first move is usually a repricing request to your current lender, with the market evidence attached. You keep your bank, your accounts and your direct debits, and only the rate changes. Keeping you costs a bank less than replacing you, so a request backed by real numbers often gets a response. If your lender won't move, then we look at what switching actually involves: the real costs, the timeline and how long until you're in front. You decide from there with the full picture.

Fixed rates, offsets and other details

Breaking a fixed rate early can trigger a break cost, and it can be significant. The better move is usually to run the comparison now and have a plan ready for the month your fixed term ends. If your loan is split, the variable portion can often be looked at straight away. If you rely on an offset account or redraw, say so up front and the comparison will only include lenders that keep those features. For the detailed maths on switching costs and payback periods, see When Is Refinancing Actually Worth It? in the Learn section.

Questions, answered

Talk it through

General information only, so the next step is applying it to your numbers. Book a chat, email ugur@demir.loans or call 0495 000 228. Free, no obligation.