Poll: Mortgage Broker

[373au]

I used a broker for my first IP, & had a good experience, (8.85% 105%LVR with Colonial) my second I used my bank (CBA) with a good result (8.85% 80%LVR), my 3rd I went back to a new popular broker & they set me up with a Macquarie loan at 90% LVR, that is now costing me 9.19%. He keeps telling me not to worry about the interest rate. I tell him but you aint paying the bills.
Went back to my bank manager (CBA) & he offered to refinance the Mac loan at a 8.59% int rate. So looks like I will refinance. The Bank manager has been very helpful & willing to do me a good deal.

Spud

 

[sailor]

I used a broker for my first IP, & had a good experience, (8.85% 105%LVR with Colonial) my second I used my bank (CBA) with a good result (8.85% 80%LVR), my 3rd I went back to a new popular broker & they set me up with a Macquarie loan at 90% LVR, that is now costing me 9.19%. He keeps telling me not to worry about the interest rate. I tell him but you aint paying the bills.
Went back to my bank manager (CBA) & he offered to refinance the Mac loan at a 8.59% int rate. So looks like I will refinance. The Bank manager has been very helpful & willing to do me a good deal.

Spud

I've just negotiated with my MB to get me out of Mac and Bluestone...their rates were over the top. Much happier now...2% less interest on each loan.

 

[meg]

Hi
I have always had a broker as never seem to get to a bank or have time to ring when they are open. Have had mixed experiences. The first time with one was great, the next time they seemed to loose momentum soon as we had agreed on what we wanted and sat in fear that the deal wasn't going to go through. Changed, did a great job for first 2 IPs then couldn't see the picture of what we were trying to do investment wise and said we were at the limit and couldn't do anything. Changed to someone recommended, very creative, started off great, but so bloody slow! My latest deal has taken 6months due to feet dragging.
Would be interested to know if people formed good relationships with their bank managers when they see you are putting quite a lot of $$ in and out, or is it just over time?
Meg

 

[WinstonWolfe]

we didn't have brokers 30 years ago when there was no where to borrow money apart from big banks who all packaged similar products.

seems we are heading back in that direction.

 

[Rolf Latham]

Hiya Winston

Diversification in the mortgage market in my opinion really only occured because of

1. Securitised lending, started in volumes by RAMS, Aussie and followed by Macq et al. ( I think ?)

2. Regional lenders looking to get a slice of a pie they could not otherwise get to.............Heritage, Adelaide Bank, R&I Bank ( now Bankwest), thus "independent" brokers and non banks grew to about 40 ish % of the total mortgage market.

Broker and non bank lending has stalled at around 40 % of the total mortgage market for quite a few years now, and the lenders are wanting it both ways................maintain nice margins, but have no meaniningful relationship with the customer.

Winston, I hope u are wrong in the direction we seem to be taking in the mortgage , but I have a gut feel and some anecdotal evidence that you are at least half right.

ta
rolf

 

[WinstonWolfe]

well I did say it was a direction Rolfy, not necessarily an end point.

with much of our export earnings going into foreign hands, a trend likely to continue (think mining companies with growing foreign ownership and control), it is hard to see credit being generated from our domestic savings and wealth generation.

therefore, it would seem there is opportunity for all and sundry to tap into global capital to keep feeding Aussie appetite for ever greater property debt.

though as my old man said when the foreign banks (i.e. BNP, Natwest) tried to pick up greater market share in Oz in the 80s, "The local banks pick the eyes out of the market and are happy to let the dregs go to the foreigners". It wasn't long before Natwest scaled their operation back drastically

edit:
Some might see similar has unfolded with the non banks in the noughties.....

 

[Peter_Tersteeg]

Most of Australia's funding already comes from overseas markets instead of domestic savings. If lending was funded through domestic deposits the banks wouldn't have increased rates above the RBA 6 months ago.

The big 4 (or 5) Australian banks put rates up slower than most of the other because they had the better deposit bases and could hold out longer, but they still did it. Now they're slashing costs to try to stay compeditive on rates in an effort to win back market share.

In the long run, were far better of with the smaller lenders in play. Prior to deregulation, the margin on home loans was almost 3 times what it is now. It was competition from smaller lenders, mortgage managers and brokers who are responsible for rates being around 9% at the moment instead of 12%.

 

[WinstonWolfe]

Most of Australia's funding already comes from overseas markets instead of domestic savings. If lending was funded through domestic deposits the banks wouldn't have increased rates above the RBA 6 months ago.

Not that I don't respect your view PT, but do you have any references to back that most Oz funding is foreign? The only figures I've seen say around 25%.

edit:
check graph 10

 

[Peter_Tersteeg]

A very fair question Winston, honestly I don't have a clue. Given the feedback I get from lenders my impression is that it's more than 25% but I have no factual evidence to support this.

I'll probably come across a figure sooner or later in some obscure report. If I do, I'll pass it on.

 

[RedPanda]

Go with the brokers if you are new in property investing and don't know too much of the jargon. But if you are a seasoned investor and you have some time to find out the best package yourself, go with the banks directly.

Cheers.

 

[WinstonWolfe]

I'll probably come across a figure sooner or later in some obscure report. If I do, I'll pass it on.

ta PT.. that report I linked was 2006 and foreign sourcing was climbign towards 30%. I'd hazard a guess it may have surpassed that significantly by now.

edit:
just found this 2007 RBA doc which confirms foreign wholesale bank liabilities at just under 30%. An interesting point is the first graph refers to on balance sheet liabiliites.

Later however, it appears securitized loans are off balance sheet, and therefore may not be included in the % loans sourced off shore. The regional banks are much heavier weighted on securitization.

Will have a squiz around the APRA website later.