Usually, I get hundreds of emails every day. They come from Lenders, clients, friends of clients, colleagues, friends, relatives and people I don’t know who want me to do something for them.
Don’t get me wrong, I’m not complaining. Life would be pretty dull without being in communication with others, but over the past week or so I’ve noticed a subtle change happening.
More and more Lenders are emailing me about the discounts available on their interest rates, both Fixed and Variable.
While it’s not unusual to see these sorts of offers, the size of them has made me start taking notice.
At the moment it is quite common to see discounts of 1.00% on Variable Rates from Lenders if you are taking out a Professionals Package for example. But it seems that this 1.00% has become the benchmark discount at the moment with Lenders making a statement to the market that they are prepared to deal.
Fixed rates have also been tumbling with 4.99% for 2 years a standout now among many Lenders. It’s a very tempting offer. The message I’m getting from Lenders at the moment is that they want your business and they are prepared to pay for it. You know what? It’s been a long time since I’ve heard a message like that.
Now the point is, the Lenders are making these offers only for NEW borrowings because that’s what they want, more new customers. They are not making these discount offers available to existing borrowers, unless of course you threaten to leave them. Whereupon suddenly they may be interested in offering you a better deal.
Personally I think it’s pretty bad form that some people have to go to all the trouble of approaching a different Lender, who agrees to give them a discount on a new loan, then as soon as the existing lender hears that the person is leaving they make a counter offer of the same discount in order to convince them to stay!
I don’t understand why the Lender doesn’t consider the person important enough to offer a discount to in the first place. But anyway, whether you can get a discount through a new loan or by threatening to leave your existing Lender, the point is its worth exploring the option to see what you can get.
Remember too that refinancing will often allow a release of equity as well and this reason shouldn’t be forgotten if you are considering it. And of course, the Credit Guidelines remain the same, it’s only the price that has changed. So keep in mind that lower prices do not necessarily mean easier borrowing.
I would also suggest that if you are thinking of going to one Lender with all your loans you should avoid this. Having one Lender control your portfolio isn’t recommended no matter what the interest rate offer is.
So there seems to be quite a price war going on between the Lenders. They are all competing for your loans. The EXISTING loan you currently have with one Lender, which might not meet their criteria for a larger discount, just happens to be NEW borrowing to another Lender who is happy to give you the better discounts.
Naturally, it’s important to consider the cost of leaving before you jump ship. You may still have exit fees from your Lender that apply when you go. Depending on your situation the lower cost may well cover the fees anyway and still make it an attractive proposition.
Here is one last thing to consider. These price wars do not last forever. Decide to review your portfolio today and if you want to improve it, commit to doing that. Remember that you refinance to improve your overall position, not just for interest rate.
As always, we would be happy to look at your situation and help get you into a better position. Or if you have any queries, please do not hesitate to contact me on (03) 9868 7500 or email email@example.com