Intransigent Lenders

Brokers, including myself, have been shocked and surprised to find that many lenders are not coming to the table to reprice some loans. Brokers are having to refinance clients away from these intransigent lenders given the disparity between their current rates and what others in the market are offering. Now I will be fair that in that the majority of cases this anti-competitive behaviour does relate to SMSF loans and loans to a Trust. However, and I will call them out, the largest bank in the country is intransigent with some products which they have now grandfathered. Eg no longer offering.

They had a product that were competitive with rate and no fees and no frills. They were extremely popular. Several of my clients took up these loans. Now the lender is refusing to negotiate on rate for that product, however, you can switch to another product (for a fee) which must be a package (for an additional fee) before they will consider your rate review request. Or you can refinance from them, but you will have to call them and request the discharge.

Another large non-major is no longer offering competitive rates and is seeing many refinances out. That said the red major is being quite competitive.

On the other side, since the start of the year some lenders have subtly been increasing rates by returning the days of tiered pricing using the Loan Value Ratio (LVR) as a pricing mechanism. Lenders for a few years have used higher rates if you are in Mortgage Insurance territory (over 80%), but now that pricing is moving to as slow as 60% for some. I had one client who requested a rate review and was told that due to her LVR the rate could not be lowered and might be increased. Please!!!!

The Banks must dance with many partners. APRA, ASIC, the media, their shareholders, and customers. Having one partner can be difficult let alone five. Something to note is that lenders must maintain their profitability, but they must also adhere to APRA guidelines that depict what percentage of their loan book must be held in a certain product. Eg Max 50% variable rate, Max 35% fixed rate. Max 20% at 85% LVR as examples. All aimed to maintain a Banks liquidity.

An example I witnessed 10 or so years ago was a major withdrawing their Line of Credit product from market because they were over their limit for that product. Subsequently as these products rollover every 12 months, clients were being forced to refinance upon maturity. The same lender, and again, a number of years ago had too much of its lending portfolio lent to non non-resident customers. Subsequently it ceased lending to non-residents and slowly requested existing customers to refinance away from them.

If you would like to know how your current loan compares, please contact me at phil@phaservices.com.au

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