February 17, 2014
After many years of dealing with Banks and other lenders, I have formed the view that rather than reward loyal customers – Banks reward disloyalty!
Think about your lender for a moment… when was the last time that they passed on any more than the RBA rate cut? In fact, you may wish to reflect on whether they even passed on the full RBA rate cut?
You may also wish to consider if your lender ever contacted you and informed you that for being such a loyal customer, they are going to reduce their fees, or reduce your home loan interest rate, or increase the rate they are giving you on your savings account.
Chances are that they haven’t.
All the sexy rates you see advertised are for "New to Bank" clients. Meaning that if you bank with said bank - they will not allow you to access this advertised rate. Seems counterintuitive, but this is the case. This fact alone is behind many a refinance.
Most lenders also employ what they refer to as “retention teams”. These teams swing into action as soon as they catch wind that a client is about to refinance to another lender. What’s the first thing that these retention teams offer when they make contact? To reduce your current interest rate, that’s what!
Strange that you could have been a loyal customer for years – even decades – and the first time they offer to reduce your rates is when you are looking to vote with your feet. One needs to ask oneself when faced with this scenario - "do I wish to stay with this bank that has effectively been ripping me off for years !?"
Some other examples of banks rewarding disloyalty are the numerous honeymoon rate offers and cash back deals for clients refinancing from one lender to another.
So it begs the question… does it pay to be a loyal bank customer? And the answer to that is simply “no”, it doesn’t pay.
Many people look forward to the RBA first meeting of the month in the hope that they will see a 25 basis point reduction in the cash rate. Some people sweat on it. But if truth be known – many borrowers on a variable interest rate facility could achieve much more than a 25 basis point reduction on their current rate by simply refinancing to another lender.
With current rates as low as have been since the 1950's - there has never been a better time to review your options. Some of the lowest owner occupied variable rates we have on our panel right now are 3.59%. How much are you paying ?
And ask yourself… "should I be a loyal bank customer, or a savvy one?"
If the answer is “a savvy one” then please give me a call today on 0414 259 699