August 19, 2016
Anyone thinking about their current home or investment loan may be wondering what's been happening with interest rates. The most common question is why their lender is offering new customers a much lower interest rate than existing customer have - for the same loan! Customers are wondering "what ever happened to loyalty?".
The reason is quite simply competition. More than 50% of home loans are now being originated by a mortgage broker, where an uncompetitive lender is very obvious.
Three or four years ago banks were typically giving people discounts of 0.7% off a "standard variable rate" loan.
To win business now they have gradually increased the discounts to about twice the usual amount, to 1.40% and sometimes more. This represents a huge potential saving to borrowers if they can take advantage of it. Saving 0.7% on a $300,000 loan can put $2,100 per year back into the borrower's pocket - and most people would be happy with that.
We've been actively engaging our customers to take advantage of these discounts now. It's a case of asking the current lender first. They won't always look after the existing customers, sometimes saying they reserve the big discounts for new customers. Some lenders are more helpful than others but with others it's hard to understand why they won't look after loyal customers who make all their repayments on time!
If there's no success negotiating with the existing lender the answer is simple. We identify a lender that really wants the business and arrange all the paperwork so the loan can move to another lender. We also make all the costs transparent so the customer can clearly see the overall benefit.
It will be interesting to see what happens in a few years - if competition lessens for any reason banks might only offer 0.7% discounts again while customers who have obtained a great interest rate discount now can bask in the glory of having a rate that no new customer can get!
The reason to call us is clear - save money while the opportunity is available!