Lenders have once again begun differentiating between their existing and new customers - and existing customers are once more subsidising new customers.

Until recently it was common for most lenders to charge a higher rate on almost all types of loans to customers it already had. The theory was that it was difficult and expensive to move lenders and thus there was a huge amount of customer inertia.

This belonged back in the days when you had to save for years and almost go down on one knee to get a mortgage at all. Over the past few years all that had changed. The lenders were competing more aggressively for new customers but were still keen to hang on to existing clients. Such was the demand for new business that they could offer a special deal to entice new customers in - but only for the first year. After that all customers would get the same deal.

But once again that has changed and as competitive pressures intensify, many lenders do not seem as keen to please their existing clients as to woo new ones.

Irish Permanent, for example, has a standard variable rate of 6.14 per cent but new borrowers can get a variable of 5.12 per cent. New customers can also opt for a one or a two year fixed rate loan at lower rates than existing customers can switch into. A two year fix for new customers costs 5.9 per cent while existing customers pay 6.25 per cent. On a £150,000 mortgage that makes for a difference of £30 a month.

EBS, which used to make a virtue of its mutuality and was one of the most vocal about this practice, now offers substantially different rates for most loans, all the way out to a 10-year fixed rate. Over 10 years the difference would amount to a very significant amount of money.

EBS is offering a five year fixed rate at 5.99 per cent for new customers but existing customers will have to pay 6.85 per cent. On a £150,000 loan that makes a different repayment of £71 a month or £4,260 over five years.

First Active is operating a similar policy with different interest rates for both classes of customers up to four years.

AIB, in contrast, offers the same rate to customers for most loans with both new and existing customers able to avail of the two year fixed rate at 6.1 per cent. Bank of Ireland and ICS do the same, as does TSB.

What prospective borrowers should remember is that they will be existing customers as soon as the initial period of the offer has expired. So when comparing rates they should look at the longer term rates for existing customers rather than just the initial deal they can get.

For example, someone going for Irish Permanent's two year fix for new customers at 5.9 per cent should take into account that the rate for existing customers is 6.25 per cent - that is above the two year rate from both Bank of Ireland and AIB.

Any borrowers tempted into fixed rates should also look very carefully, and although the cost of switching in legal fees can be expensive in some circumstances it can make the switch worthwhile, particularly if you have a good number of years left to run on your loan.