The RBA publishes a data series most borrowers have never heard of called Lenders' Interest Rates. It tracks the average rate paid on outstanding variable owner-occupier loans against the average rate written on new ones. As at the April 2026 release, outstanding variable owner-occupier loans averaged about 6.38 per cent while new loans were being written at about 5.90 per cent. That 48 basis point gap is the loyalty tax, and in this rate cycle it is as wide as it has been since the RBA started publishing the split.
The mechanics are simple. When you took your loan, the bank gave you a discount off its standard variable rate to win the business. Every year since, it has offered bigger discounts to new customers while leaving your discount where it was. Three rate hikes in 2026 were passed through to you in full within a fortnight each time. The sharper new-customer pricing was not. Nothing about your loan changed except its margin.
What the gap costs at real loan sizes
- $400,000 loan: 48 basis points is about $1,920 per year, or $160 a month.
- $600,000 loan: about $2,880 per year, or $240 a month.
- $750,000 loan: about $3,600 per year, or $300 a month.
- $1,000,000 loan: about $4,800 per year, or $400 a month.
Those are averages. Borrowers who settled in 2021 and 2022 and have never repriced are frequently 60 to 80 basis points above their bank's current front-book rate, because they have missed four years of discount creep. A 70 basis point gap on a $700,000 loan is $4,900 a year.
The 15-minute phone call
Every Big 4 bank and most mid-tier lenders run a retention team whose entire job is stopping discharges. Front-line staff typically hold 10 to 20 basis points of pricing discretion; retention teams hold more, commonly up to 40 basis points on a clean file, applied without a new application or credit check. The script that gets you there:
- Look up your current rate in your banking app before you call. Most borrowers do not know it, and the call goes differently when you open with the number.
- Find two comparison points: your own bank's advertised new-customer rate for your product and LVR, and one sharp external rate (Athena, ING Mortgage Simplifier and Macquarie Basic are all publishing between 5.74 and 5.99 per cent for prime owner-occupier P&I right now).
- Call and ask for the mortgage retention or "home loan review" team, not the general line. Say the words "I am considering refinancing and I would like a rate review before I lodge the discharge form."
- Ask for the specific gap to be closed: "Your new-customer rate for my exact product is 5.95. I am on 6.45. What can you do?"
- If the first offer is 10 basis points, say it is not enough and ask for it to be escalated to pricing. The second offer is usually better. The discharge form mention is what unlocks the retention matrix.
Success rate on this call is high. The banks do not publish it, but broker-side experience is that a clean file with an LVR under 80 per cent gets meaningful repricing in well over half of attempts, same week, no paperwork beyond a confirmation letter.
When to stop calling and refinance
The phone call has a ceiling. The bank will close some of the gap to its own front book; it will not match the sharpest external lender, because its funding costs will not let it. The decision rule we would use: if the rate you hold after a genuine retention offer is still more than 25 basis points above what a broker can place you into externally, and your file is clean, run the refinance maths. At 25 basis points on $600,000 you are leaving $1,500 a year on the table; switching costs of roughly $700 to $1,100 in government and discharge fees pay back inside the first year.
Two cautions before you lodge anything. First, check any cashback you took within the last three years; CBA, Westpac and NAB all now run three-year claw-back periods on refinance cashbacks, and the claw-back can exceed the first-year saving. We covered the claw-back small print in detail last week. Second, if your property is in Sydney or Melbourne, get the valuation question answered early; values there have fallen for five and six consecutive months respectively, and a refinance that pencils at 78 per cent LVR on your purchase price can come back over 80 on the new bank's valuation. More on that in a separate piece this week.
Disclosure: Your Finance Guide partners with Australian Lending and Investment Centre (ALG) ACL 505575 for broker matching. ALG receives commissions from lenders when a refinance proceeds. A retention repricing at your existing bank pays a broker nothing, and a good broker will still tell you to take it when it is the right outcome. The RBA figures quoted are from the publicly available Lenders' Interest Rates statistical tables.