It comes at the worst possible time for many homeowners, with several cost-of-living rate hikes looming on the horizon – possibly as soon as next Tuesday, several major banks have warned.

However, West Australian single father Michael Brooks has found a loophole and is saving himself $8400 a year.

The 44-year-old single father from Perth knew his home’s three-year fixed loan was about to expire. But when he looked for refinancing options, he was “horrified”.

His bank essentially charged him a “loyalty tax” where they offered him a 4.19 percent rate for an extension – although they claimed they could give 3.19 percent on their website.

“If they can’t offer a 20-year-old customer the best advertised price, they don’t deserve my business,” Mr Brooks told news.com.au.

In January, Mr. Brooks left his longtime bank and joined a small digital lender called Nano, which was able to give him an interest rate of 2.79 percent.

“I’ve saved over $700 a month compared to when I started,” he said.

That equates to a savings of $8,400 per year — or $25,200 in his pocket over three years. And he pointed out that as a single father with the cost of living rising, every dollar counts.

“I’m a single dad and I have an income, I have to maintain the house I live in… Every penny counts,” he explained.

“If interest rates rise, discretionary spending will be curtailed, it could mean the car upgrade will be postponed for a couple of years. The rate hikes could just mean I have less buffer there in case the calamity happens.”

With that in mind, he was happy to switch lenders.

According to Nano, around 75 percent of their funding needs come from traditional banks, while 56 percent of those funding requests came directly from big banks alone.

“It’s about the bank being transparent,” added Mr. Brooks.

Although the RBA has not raised interest rates since November 2020, several banks have already raised their fixed interest rates in anticipation of the forthcoming announcement.

Some have also lowered their variable interest rates to bring borrowers back to their knees.

For example, the Commonwealth Bank raised its three-year fixed-rate mortgage rate last month by 0.3 percent to 3.79 percent, which is now more than 1.5 percent above the variable rate offer.

NAB and ANZ – Australia’s third and fourth largest banks – also raised fixed rates on owner-occupier loans by up to 0.4 percentage points.

The interest rate for a one-year fixed rate for ANZ and NAB is now 2.99 percent, while five-year fixed rates are also the same at 4.49 percent.

RateCity.com noted that NAB had raised fixed rates for the seventh time in the past six months and for the sixth time for ANZ in the same period.

As late as September, the big four banks were offering three-year fixed-rate home loans ranging from 1.98 percent to 2.19 percent.

Now those rates range from 3.59 percent to 3.79 percent.

While the RBA’s previous stance was to hold interest rates on hold through 2023, the data showed that the cost of living had hit a 22-year high, rising 5.1 percent year-on-March.

This has left the RBA with little choice but to hike interest rates several times this year.

Three major banks are forecasting a rate hike as early as next Tuesday.

ANZ, NAB and Westpac have both forecast a 0.15 percent rise in early May.

It will be the first time interest rates have risen in 11 years.

The Commonwealth Bank has also forecast a 0.15 percent hike, but for June, despite dire warnings that interest rates could hit 2.5 percent overall by the end of the year.

Andrew Walker, CEO and founder of Nano, warned that Australians are “sitting on the edge of the fixed rate rollover cliff”.

“The Commonwealth Bank of Australia alone is expected to convert a whopping $53 billion of fixed rate mortgages to variable rates in the second half of 2023,” he said.

“Assuming the other big banks have the same structure as the CBA, we could expect $400 billion in fixed-rate mortgages to be converted to variable-rate mortgages over the next few years.”