Will the banks pass on the rate drop?

Will the banks pass on the rate drop????

This is more than a fair question, we do see and hear a lot about this in the media, but like anything that we hear (i.e. believe none of what you hear, and believe half of what you see :) ), we need to take a balanced approach. I imagine the bank will make this decision in good time, but irrespective of their decision, we will see them as the well-established, profit making machines that they are (unashamedly so). This should not be news, but they are publicly listed companies, looking to make money, not friends (contrary to their advertising campaigns J).

What is not helpful to the mortgage industry or your home loans as a whole, is the most recent banter from the Treasurer Wayne Swan. As he has been many times before, he is disturbingly simplistic and misinformed on this topic. He has been claiming all day that if you are not happy with the rates with the four majors at around 7.5% or so, you should move to one of the other banks that have already dropped their rates.

Firstly, OMG, if you are still on a Standard Variable rate (SVR), without a discount of some description CALL ME IMMEDIATLEY!!! Most people (with good guidance) should never be paying the SVR, that is they should be receiving a discount below it, or be on a ‘Basic Variable’ (lower rate, with slightly lesser features).

I have said it many times before, but a simplistic approach to banking and the approach taken to refinancing (for the sake of refinancing as Wayne is suggesting) is VERY RARELY in the clients’ best interest (which should be the sole purpose for any move). You are not changing underpants here…. you are restructuring a major financial commitment and the associated fees and charges are MORE OFTEN THAN NOT, higher than the ‘simplistically suggested, knee jerk’  gain claimed.

If Wayne Swan wants to have an actual effect on the true ways of getting better pricing for clients, we should be looking to better competition, rather than hit the media with misguided and ill- informed sound bites for political gain, with no gain for the customer. Perhaps (with the risk of talking about spilt milk) had he not made ill-informed moves around two to three years ago in other knee jerked reactions with deposit guarantees (for the BIG FOUR ONLY MIND YOU!!), we would not be in the position we are in now (more than happy to explain if you would like to chat..).

I do not often rave on about this style of information, but I feel it is imperative that the main reason for a move between banks not be a politically fuelled ‘brain fart’ based sound bite, but rather a well-informed, individually client based decision making process.

As always, happy to chat….