mortgage holders

The major change coming to Australia’s banking sector that could save mortgage holders tens of thousands of dollars

PHOTO: An investigation by the Australian Competition and Consumer Commission has found that loyal customers are being swindled by banks over their interest rates (Stock image pictured)

Major changes to how banks offer interest rates could result in homeowners saving tens of thousands of dollars.

The Australian Competition and Consumer Commission has found loyal customers are being swindled by banks.

The watchdog wants to make it a requirement for banks to tell borrowers every year what interest rate they are being charged.

The move is to stop loyal customers, many of who leave their variable interest rates unchanged for at least four years, ending up with less competitive rates than new borrowers.

The commission also wants to make it mandatory for banks to reveal the average rate on new loans.

The changes could see customers make big savings by switching to their bank’s average interest rate.

A report by the commission, which is due to be released on Saturday, suggests that someone with a $500,000 loan could save $2,800 in a year or up to $34,000 over the life of the mortgage.

A borrower with a $500,000 loan which had been held for 10 years could save $5,140 in a year and $50,300 overall by switching to their bank’s average rate.

The plan, which is being considered by the Federal Government, comes after the investigation found that more competitive interest rates were only passed on to those signing up for new loans.

The investigation also found that about half of all variable rate loans have been unchanged for at least four years.