I was chatting to another broker recently about how our work is so freakin’ challenging because there are so many moving parts.
Most of the important information we rely on for a successful outcome is fluid – think payslips, balances, price changes, document dates, new conversations that change the previously agreed amount of the loan or configuration, etc. etc.
And I haven’t talked about the cost of borrowing i.e. the % and how volatile the rate changes have been since around October last year.
Not the end of the World. People deal with us because we’re the problem solvers, but it can flush a few hours of work down the drain pretty quickly.
The way we are approaching today’s rising rate (and everything else) environment is by doing these four things:
1. Choosing a lender we have at least a few dozen Clients with and have received excellent feedback. We call this “hard to move”. i.e. we can’t find another lender who can beat the price or service AFTER we’ve placed the Client there.
2. Choosing “always competitive interest rates”. This ties into point ‘1’ above. There’s a small handful of lenders that are always sharp and consistent with fees. We want our Clients to be with them – it reflects well on us, too.
3. Understanding rates change – always. Right now, each lender is doing their own thing. Some lenders are lagging behind with raising their rates, which is making them look sharp.
Maybe so, but you have to remember that if the rate hasn’t been raised since early July, for example, there’s 1% of RBA increases that will probably be added at some point.
What we do here is get the latest updates from the lender (we’ve had most of the major and a good handful of the non-major lenders come out to the office in the past month) and check when the latest rise was.
If the rate increased this month, then we have confidence in that price holding for at least a month. If not, we check when the rate rose last and then add 0.50 or 0.70, or 1% to it depending on our view.
Why? Because a bank can change their rates to whatever amount, by whatever degree, whenever it suits them.
4. Letting our Client’s know that rates can fluctuate before, during and after the application process. Don’t tell us we never told you.
Right now, on owner-occupied type lending, i.e. you’re living in it, you should be seeing something like 3.5% or thereabouts.
For those of you in the market, there are some attractive ‘acquisition’ offers available. Ask us about them >>here.
And please don’t be a simpleton and go directly to CBA, Westpac, ANZ or NAB because you’ve been with them since you were a kid.
The majors have their place, but only if we can’t get the job done better elsewhere. Love you guys 😉
For those of you with a big chunk of credit outstanding, the same applies, you should be in the mid-three percent range.
Demand more from your current lender – call them and ask “are you really looking after me”.
They won’t be.
After you’ve done that, book a quick call with me and we will review, recalibrate, reduce rates and if necessary, restructure. The “Five R’s”. I just invented that.
Don’t ask me why so many people whinge about the price of capsicum and coffee but won’t pull their finger and review their loans and other credit.
It takes a few minutes to figure out how we can save them a few thousand each year in wasted money (bank profit). Let my team take care of you and you can make free salad for the next 10-years.
I dunno, some people must like wasting money.
P.s. if you’re interested in adding to the bank’s multi-billion dollar bottom line, why refinance, save a few grand and then invest that into bank shares and create some financial security? Know what I mean?
Cheers,
Brodie Brown
Professional Mortgage Broker