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Banks are greedy and we allow them to be.

Part 1: Interest Rate Creep

By their very nature, humans are loyal and for the most part this is a great quality. However, loyalty can have a detrimental effect on your finances. You need someone in your corner who can fight for you. This is a broker’s role.

Recent research by found that over 40% of bank customers are still with the institution they joined as a child. This loyalty or laziness can come at a cost.

The following example is all too common in my world:

Client has an existing home loan and has been with their bank for 5 years. When they initially signed up, they were first home buyers and didn’t give much consideration to the medium term. They fixed their loan for 3 years to gain some certainty around rate, not noticing that the revert rate after this period was the bank’s standard variable rate. This turned out to be 5.29%. These clients now earn more, owe less than 80% of their home's value and regularly make additional repayments on their loan. They are prime customers and any bank would love to have them.

We can generally renegotiate this product or refinance to a rate of well under 4% and in some cases, get their cost of refinance covered by the new lender. Their annual interest savings on a mortgage of $300,000 will be more than $4,000/annum.

Best of all, this loan will now be actively managed by us, reviewed regularly and the client has one point of contact for all future finance requirements.


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