October 06, 2009

RESEARCH showing that banks charge their home-loan customers a higher variable rate than the average offered to new borrowers has ignited a controversy over the cost of switching mortgages.The research, commissioned by The Australian from independent industry analysts brandmanagement, says the average variable rate offered to new borrowers is 5.24 per cent.

However, based on a survey of 4722 borrowers, brandmanagement says the four major banks charge their existing home-loan customers an average premium of 29 to 44 basis points.The big four banks rejected the findings, which came on the eve of today's Reserve Bank board meeting that is likely to leave the official cash rate at 3 per cent.