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Customer loyalty doesnt pay off

LOYAL home loan customers are missing out on cut-price deals being offered to new customers if they sign up.

Multiple home loan lenders have rolled out falling rate deals already this year Suncorp and AMP are among those who have dropped their rate deals on both fixed and variable home loan products, new analysis by financial comparison RateCity shows.

BIG SAVINGS: Sign up to the best variable home loan offer

But the findings show many of the deals are for new borrowers only and are not being offered to a lenders existing customer base.

RateCity spokeswoman Sally Tindall said it was great to already see new discounted home loan deals creeping onto the market this year but loyal customers were being left out.

Special introductory offers and new low-rate products are designed as a marketing tool to attract new customers, not retain existing ones, she said.

It can feel like a slap in the face for loyal customers but that doesnt mean you have to just cop it.

If you are a long-serving customer, find out what rate your bank is offering new customers, because if its different youve just got yourself a bargaining chip.

According to RateCity data Suncorp dropped their three-year fixed owner occupier package deal by 20 basis points to 4.29 per cent but the deal is only available to new borrowers.

New figures show on a standard $300,000 30-year home loan the average standard variable rate is 4.64 per cent and the monthly repayments are $1546.

On an average, three-year fixed rate are 4.39 per cent and the monthly repayments are $1501.

1300homeloan director John Kolenda expects borrowers to enjoying more rate drops this year and forecasts the Reserve Bank of Australia will lower the cash rate from two per cent in the coming months.

We might see the cash rate reduce because of all the headwinds which includes in China and stockmarket, he said.

I think we are likely to see a cut in the first quarter of this year or definitely in the second quarter.

The RBA board meets in February for the first time this year in 2016.

St George senior economist Hans Kunnen said the falling rates signalled competition and the hunt for market share by lenders but said the low rates wont last forever.

People might start talking about the possibility of a rate hike towards the end of the year and that could spook people, he said.

Rba keeps close eye on china and greece

THE Reserve Bank will keep a close watch on China’s stock markets, the Greek debt crisis and soft local business investment to assess whether further rate cuts are needed.

The RBA cut the cash rate to a historic low of two per cent in May and has left rates on hold at its June and July meetings.

In the minutes of the July meeting, released on Tuesday, the central bank said international and local economic news would play a part in future rate decisions.

Information to be received over the period ahead on economic and financial conditions would continue to inform the boards assessment of the outlook, the RBA said.

That assessment would inform whether the current stance of policy remained appropriate to foster sustainable growth and inflation consistent with the target, it said.

The Reserve Bank said economic growth in Australias major trading partners was around average, but key considerations remained turbulence on Chinas stock markets and Greeces ongoing debt saga.

Recent volatility in Chinese equity markets and potential spillovers from developments in Greece would require close monitoring, the RBA said.

But the direct impact of any further Greek turmoil was likely to be relatively limited, it said.

The minutes come after a breakthrough in Greeces debt negotiations with its international creditors on a third bailout deal, and big falls on Chinese equities markets earlier in July despite measures by Chinese authorities to support the market.

The RBA said the local economic picture remained largely unchanged from previous months, with low interest rates supporting housing investment and consumption growth, while mining and non-mining investment remained weak.

Nevertheless non-mining business profits had increased over the past year and surveys suggested that business conditions had generally improved, the RBA said.

The national housing market was little changed, with Sydney experiencing notable strength, and the effect of greater regulator scrutiny of investor remains unclear, it said.

The Australian dollars drop against the US dollar to levels not seen since 2009 was not boosting the economy by as much as the bank expected.

Further depreciation seemed both likely and necessary, the RBA said.

The bank noted signs of continued improvement in the jobs market, and said inflation remains well contained.