Stretched mortgage holders could save hundreds of dollars each month by switching from a big bank to one of their subsidiaries.
Ahead of the March interest rate decision on Tuesday is widely expected to result in another month of rates on hold and further pressure on borrowers, analysis shows customers are missing out on better deals offered by the smaller offshoots of big banks.
Numbers crunched by comparison site Canstar shows the interest rate difference could be as large as 0.75 percentage points.
Canstar finance expert Steve Mickenbecker said the big banks were undercutting themselves as they offer lower-cost home loans online to entice new customers.
Customers with the main brand were then used to prop up the lower margins on these new loans, Mr Mickenbecker said.
"This has led to a fascinating paradox with the major banks cannibalising their margin on new lending through their subsidiary brands to gobble up their competitors' lunch," he said.
For example, National Australia Bank's most competitive offer of 6.84 per cent was higher than the 6.14 per cent offer from its Ubank unit.
A borrower with the average-sized loan of $600,000 could save $277 on their monthly mortgage repayments by jumping to the best offer with NAB's subsidiary.
Similarly, Commonwealth Bank's best variable rate of 6.49 per cent was much higher than the 5.99 per cent rate offered by Unloan.
The terms and conditions attached to the loans were not always like-for-like and it was important to factor in all the features needed to pay a loan off as quickly as possible, Mr Mickenbecker.
Unloan's best offer, for example, had no offset account and was limited to refinancing customers.
Mortgage holders have been under pressure from rising interest rates after Australia's central bank embarked on a tightening cycle in 2022 to bring inflation back under control.
Inflation remains above the two-three per cent target range but the monthly consumer price index was at its lowest since November 2021 in the 12 months to January, rising just 3.4 per cent.
Economists on the Reserve Bank shadow board were strongly in favour of interest rates staying on hold at 4.35 per cent in March, attaching a 61 per cent probability to a pause as the right move.
Only a nine per cent probability was attached to a 25 basis point rate cut.
The central bank met on Monday under the new monetary policy process that stretches board meetings over two days.
The decision will be made public on Tuesday afternoon, followed by a press conference with RBA governor Michele Bullock.
