Borrowers hit with loyalty tax
Borrowers who stick with the same lender year after year are probably being slugged with a ‘loyalty tax’, according to new data from CoreLogic.
Owner-occupiers who took out new variable loans in April were charged an average interest rate of 2.77% p.a. However, owner-occupiers with existing variable mortgages were charged an average of 3.10% p.a. – forcing them to pay a loyalty tax of 0.33 percentage points.
Investors had to pay an even larger loyalty tax, with variable loans priced at 3.06% for new borrowers and 3.44% for existing borrowers – a gap of 0.38 percentage points.
For a $500,000 mortgage, those interest rate differentials can add up to a lot of money over the life of the loan:
- You pay $31,887 less interest over 30 years with a rate of 2.77% p.a. rather than 3.10% p.a.
- You pay $37,539 less interest over 30 years with a rate of 3.06% p.a rather than 3.44% p.a.
ATO issues tax warning
The Australian Taxation Office has reminded property investors to beware of common tax traps that...
Lenders offering green loans
Do you want to make your home more sustainable? If so, you might be interested...
Demand outstripping supply
Properties are being removed from the market faster than they’re being added, which is pushing...
Investor activity rising
First home buyers have been drifting out of the market, while investors have been piling...
ATO reveals key tax mistake
Keen to get your hands on a tax refund? Well, the Australian Taxation Office has...
Property investors cashing in
This is a great time to be a property investor, with tenants being forced to...
Many homes cheaper to buy than rent
New analysis from CoreLogic has found that buying a property is cheaper than renting for...
Mortgage deferrals available
As many parts of Australia have returned to lockdown over the past few weeks, lenders...