On 11 August, the Reserve Bank left the cash rate at 4.35% for the second meeting in a row. After three rate rises in the first half of the year, plenty of borrowers read that as permission to stop thinking about their mortgage for a while. That's exactly the wrong takeaway — because the number that decides what you pay each month isn't the cash rate. It's your rate. And if you haven't looked at yours since before this rate cycle started, there's a fair chance it has quietly drifted above what your own bank is offering the person who walked in yesterday.

That gap has a name. Borrowers, journalists and regulators call it the loyalty tax, and in 2026 it's wider — and better documented — than it has been in years.

First, where rates actually sit right now

The RBA's August hold keeps the cash rate at 4.35%, where it landed after increases in February, March and May. Inflation is moving in the right direction — headline CPI eased to 3.8% in June, down from 4.0% in May — but underlying inflation is holding around 3.6%, and the Bank doesn't expect it back near the middle of its 2–3% target until late 2027. Translation: nobody official is promising cuts any time soon.

The 2026 cash rate path

RBA cash rate target, % p.a.

Cash rate rose across February, March and May 2026 to 4.35%, then held in June, July and August.

Meanwhile, the average rate on a new owner-occupier loan is sitting around 6.25% p.a. — and the market underneath that average is genuinely competitive. Canstar's database counts almost 50 lenders currently offering a variable rate under 6%. Those two facts can both be true at once because the sharp pricing is pointed almost entirely at new business. Which brings us to the tax.

What the loyalty tax actually is

The loyalty tax isn't a fee. You won't find it on any statement. It's a pricing gap: the difference between the rate your lender advertises to win a new customer and the rate you, the existing customer, are still paying on essentially the same loan. It builds slowly. Fixed terms roll off onto uncompetitive revert rates. Discount campaigns come and go without touching the back book. Rate rises get passed on to existing borrowers in full and fast, while the sweeteners go to whoever's shopping today.

And it's not a theory. The RBA's own lender interest rate data from July showed existing borrowers on an average variable rate of 6.23% while new customers were being written at 5.95% — a 0.28 percentage point gap across the whole market. ASIC's mortgage pricing inquiry found existing customers at the big four banks typically pay 0.30% to 0.50% more than new customers at the very same bank. Brokers on the ground regularly see gaps wider again once actual settled pricing is compared.

What loyal borrowers pay vs what new customers get

Average variable rate, % p.a. — July 2026 RBA lender data

Existing borrowers 6.23% vs new customers 5.95%, with sharper advertised rates below 6%.

What it costs in real money

Percentages sound small until you put them against a mortgage-sized balance. On a $600,000 loan, a 0.40% gap — squarely inside ASIC's documented range — is roughly $135 to $170 a month in extra interest. Call it $1,600 to $2,000 a year, for doing nothing wrong except not asking. Industry data cited by the MFAA puts the average annual saving for borrowers who actually switch lenders at around $1,900. Stretch a "set and forget" gap across five years and you're staring at the price of a decent car.

The cost of doing nothing

Approx. extra interest per year on a 0.40% rate gap, by loan size

Roughly $1,600 a year on a $400k loan, scaling to about $4,000 a year on a $1m loan.

Australians have noticed — refinancing is at record levels

The market response has been emphatic. ABS Lending Indicators show owner-occupiers switched a record $42.9 billion of home loans to a new lender in the March quarter of 2026 — 66,617 loans in three months. Add internal refinancing (renegotiating with your existing bank) and the churn is bigger again. Lenders know this, which is why retention teams exist: when a discharge form lands, rates that were "impossible" a week earlier have a way of appearing.

"A hold is not a freeze on your home loan rate. Your lender still sets existing-customer pricing — and the sharpest deals are still pointed at new business."The practical read on the RBA's August decision

The 20-minute check: negotiate first, switch if the maths says so

You don't need to refinance to beat the loyalty tax — you need to make your lender price you like a new customer. Refinancing is the lever you pull when they won't. Here's the sequence we'd run:

Why act during a hold, of all times?

Because a hold is when the gap is most visible and the queue is shortest. When the cash rate moves, everyone rings their bank at once. When it doesn't, retention teams have room to negotiate and lenders lean harder on new-business pricing to keep volumes up — which is precisely the pricing you want to be compared against. The major banks' economists are split on whether the next move is another hike or an eventual cut; either way, the rate you negotiate now is the base everything else moves from. If rates rise again, you've cut the pain. If they fall, cuts get passed onto a sharper starting rate.

The bottom line

The RBA gave borrowers a breather this month. Your bank didn't necessarily give you one. Twenty minutes with your statement and a comparison rate will tell you whether you're paying the loyalty tax — and in a market where nearly 50 lenders are pricing variable loans under 6%, loyalty without a written offer to justify it is just money left on the table.

Want the comparison done properly? Oxcel's brokers can review your current loan against a panel of more than 170 lenders and industry partners — no obligation, and checking your options doesn't touch your credit score.

Frequently asked questions

What is the home loan loyalty tax?

It's the gap between the rate a lender offers new customers and the higher rate its existing borrowers keep paying on the same type of loan. RBA data from July 2026 put the market-wide average gap at about 0.28 percentage points; ASIC found big-four existing customers typically pay 0.30–0.50% more than new customers.

Did the RBA change rates in August 2026?

No — the cash rate was held at 4.35% on 11 August, the second consecutive hold after three increases earlier in the year. Inflation eased to 3.8% in June but remains above the 2–3% target band.

Is refinancing worth it in 2026?

Often, yes — owner-occupiers switched a record $42.9 billion in loans in the March quarter alone, and average annual savings for switchers sit around $1,900. But always try a retention offer from your current lender first, and check switching costs and any cashback clawback periods before you move.

Will checking my options hurt my credit score?

Comparing rates and getting a quote through Oxcel doesn't involve an upfront credit check. A formal application with a lender does — which is another reason to compare properly first and apply once, to the right lender.

Data referenced in this article: RBA cash rate decisions and lenders' interest rates data (2026); ABS Lending Indicators, March quarter 2026; ASIC mortgage pricing inquiry; Canstar rate database (August 2026); MFAA-cited switching data; Finder repayment analysis (July 2026). Figures were current at publication and can change at any time.