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Banks’ sneaky move after rate rise

Smaller banks are offering attractive interest rates to new customers, but the reality is likely very different for existing customers.

A loan expert has weighed in on the whether big or small banks are giving bang for your buck as interest rates soar. Mortgage holders have sweated through 10 consecutive cash rate rises in less than a year as the Reserve Bank of Australia tries to force down inflation.

All of the big four banks have passed on the entire 3.5 per cent rate rise to their customers since May 2022.


However, 15 small Australian banks did not pass on the full extent of rate hikes to new customers, analysis by financial comparison website Finder has found. The lowest total rate rise was reported at Newcastle Permanent at 2.1 percentage points, while the highest was Teachers Mutual Bank at 3.1 percentage points. The rates provided by Finder are the minimum rate on offer which money editor Richard Whitten says is whatever a lender is offering new borrowers each month.

The story is very different for existing customers.


“If the RBA says 25 basis points, you’re almost certainly looking at that being added to your loan,” he told NCA NewsWire. He went on to explain that Finder doesn’t have any visibility on what lenders are doing to individual rates.


“I guess the reality is when a customer is on the books already, you can pass on those rate rises and you can sort of just get away with it because everyone else is doing it,” he said.

“They’re banking on you to not notice and not switch because most people don’t.”





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