Markup in Finance: 2025 Guide for Australians

When you hear the word “markup,” your first thought might be retail or groceries. But in the world of finance, markups have a far broader—and often more significant—impact on your wallet. As Australia continues to tighten regulations in 2025, understanding how markups work in banking, loans, and investments can help you avoid hidden costs and make smarter financial decisions.

What is a Markup and Where Does it Show Up?

In its simplest form, a markup is the difference between the cost of a good or service and its final selling price. In finance, markups often refer to the additional amount a lender, broker, or intermediary adds to the base rate or cost before passing it on to you, the consumer. While this practice is legal and standard, the size and transparency of markups can vary widely.

• Home loans: Lenders may add a margin to the Reserve Bank of Australia’s cash rate before quoting you a mortgage rate.

• Car finance and personal loans: Dealerships or brokers might tack on extra percentage points to the financier’s base rate.

• Currency exchange: Banks and money changers often add a markup to the mid-market exchange rate, increasing the cost of international transfers.

• Investment products: Managed funds and ETFs can include hidden markups within management fees or through ‘spread’ costs when buying or selling.

2025: New Transparency Rules and Their Impact

This year, the Australian Securities and Investments Commission (ASIC) implemented tighter disclosure requirements for markups, especially in lending and financial advice. These reforms aim to make it easier for consumers to see exactly what they’re paying for and compare options more effectively.

Key 2025 regulatory changes include:

• Mandatory disclosure of all loan markups: Lenders and brokers must now break down the base rate and the added margin in all new loan contracts.

• Stricter oversight of investment product fees: Fund managers are required to clearly state all embedded costs, including markups on asset purchases.

• Standardised comparison rates: For credit products, the comparison rate must reflect not just interest but all fees and markups—giving Australians a clearer way to shop around.

These changes empower consumers but also challenge traditional business models. For example, some car dealerships and mortgage brokers have shifted to flat-fee service models, while others are undercutting each other to attract rate-savvy customers.

How to Spot—and Avoid—Hidden Markups

Even with improved transparency, markups remain a common source of extra cost. Here’s how you can protect yourself in 2025:

• Ask for the base rate: When offered a loan or financial product, request to see the lender’s base rate and the exact markup being applied.

• Use comparison sites: With standardised comparison rates now mandatory, it’s easier than ever to shop around. Don’t just accept the first offer—compare multiple providers.

• Check the Product Disclosure Statement (PDS): For investment products, scrutinise the PDS for details on all embedded fees and markups.

• Negotiate: In many cases, especially with personal and car loans, markups are negotiable. Don’t be afraid to ask for a reduction or to shop your deal elsewhere.

• Look for fixed-fee advisors: Where possible, choose brokers and advisors who charge transparent, flat fees rather than percentage-based markups.

Real-world example: In early 2025, a Sydney couple refinancing their mortgage found a $4,000 difference in annual costs between two lenders due to different markup structures—despite identical advertised rates. By asking for a full fee breakdown, they were able to negotiate a lower margin and save thousands over the life of the loan.

The Bottom Line: Markups Matter More Than Ever

Markups may seem like small percentages, but they can add up to thousands of dollars over time. With 2025’s new rules making these costs more visible, Australians have more power to challenge excessive markups and choose better-value financial products. Take advantage of the increased transparency, ask the tough questions, and never settle for an unexplained extra cost.