The competition regulator has slammed the major banks for charging loyal customers too much for their mortgages in a damning review of interest rate moves that "stifled" choice and added $1.1 billion to bank revenue.

The findings send another warning to home loan customers to check their interest rates and switch their accounts, with the regulator claiming a saving of about $850 a year for those with an average mortgage.

The regulator says those with an average mortgage can save about $850 a year. Credit:Rob Homer

The Australian Competition and Consumer Commission said the royal commission into the banks was encouraging some customers to shop around for better deals but it also found the industry imposed high costs on those who tried to switch their accounts.

In a study of interest rate moves during the last financial year, the ACCC concluded there was "accommodative" behaviour between the banks when ANZ increased the interest rate on residential home loans and others soon followed.