What are you paying for your Variable rate?

Good Evening

I'm a new poster to the forum but found this an interesting thread.

I have a few clients who we put thru CBA/Colonial.

Nevertheless, most have borrowings exceeding $1m, and total 'relationship' coming to CBA was in excess of $3m, including manged funds, insurances etc.

Most recent was one where we obtained 0.95% off variable and line of credit, no package fees and all other fees waived. So in part there is a trade off between if you are only offering them a loan or something a bit more.

From my debriefs, if your broker has you thru ANZ as well and your holdings are worthwhile (i.e. over $800k) ANZ is offering similar pricing to
acquire new business. So, I dont see why they wouldnt do it for existing as well.

There may also be an issue with many brokers being unable to offer these higher discounts as it affects their trailing income and commission, which in many instances (not saying this is the case with present company) they simply arent prepared to do.

Cheerio

Saint.
 
Hiya Saint

Welcome

.95 % off variable. Thats a good rate, but is not sustainable for any mainstream lender across all borrowings, whether branch or broker introduced. At that level the true ROI would be less than 10 %, not something the shareholders would like too much. Most of the larger scale lenders like 20 % or more, and with a squeeze will live with 15 %.

ta
rolf
 
Saint said:
Good Evening

Most recent was one where we obtained 0.95% off variable and line of credit, no package fees and all other fees waived. So in part there is a trade off between if you are only offering them a loan or something a bit more.

Cheerio

Saint.

Welcome Saint,
Can you detail what fees where waviered. Trust Acct fees, all credit cards, etc...What about in different names? but the same source.

Regards, Peter 14.7
 
Saint,

It may interest you to know that there are some banks that place a higher minimum profitability on branch originated loans than broker origonated loans, because branch costs per loan are greater than trailing commissions to brokers. The coment re brokers not being able to match discount from branches, or not being wiling to do so is incorrect.

Regards
Alistair
 
Good Evening Peter Alistair & Rolf

Please do not read wrongly into my below comments... not intended to be offensive to anyone - just throw a few questions out there. I’m quite sure I’m going to get a bit of a blast in part.

Perhaps your comments are in part true... I recall years ago the best you could hope for would be what - 0.25 - 0.50 off variable (if anything), then its now gone to 0.7 and many lenders are starting to scratch to the 0.80%, with my prior reference achieving even more highly.

Also I agree with your and Rolf's points, and to rephrase, the client which I was alluding to is in an extremely strong position and banks were falling all over themselves to acquire his business, which is another strand in this altogether - the value of the client - or the percieved value/potential in many cases which helped us negotiate that much more.

If I may be so bold as to put this query out there, with the continual increasing in competition for clients in the market, how many of the brokers on the panel have reviewed their client bases to achieve the same or better - whether it be with the same current lender or otherwise?

As most would be aware, you can walk in and go to most banks nowadays or find a broker and get 0.70% off variable if you are over $250k no problem and in many cases even with less... with or without some sort of pro-package. Fixed's are another story altogether obviously, and I realise you have to place a client to where they are at - at the time.

Of all of the postings I have skimmed through (albeit early days and I dont log on to this site every day as business doesnt permit the ability to sit online every day so this is more of a 'fun' thing) I havent found one person in the fourm who has achieved over 0.90% off variable and line of credit with a lender and is telling all of the others - or saying - call this guy at westpac or this broker here as he'll get you this ridiculously low rate... and for that matter a broker coming up with the same - you'd think they would be shouting it out to gain the business (as they are so cost effective).

So in part my simple question is why? Why does it occur and why is it better for a client to pay 0.20% more or 0.45% more than they need to off normal variable or loc? Even low docs are competitive now and in many cases the same rate would apply to a low doc that it would a normal client.


Where I am thinking here to hope to clarify...

In addition to placing the finance and getting that through, a brokers job to the layman in part - is to get the best available deal for their clients... so is there a double standard?

Say for example is it that if a client refinances a broker introduced loan from a bank in X amount of time, then in many cases, the broker is subject to clawbacks so... is the broker somewhat reluctanct to switch his clients, knowing that there are better offers out there now than what there were a year or two years ago, but also knowing he might have clawbacks and does a cost/benefit analysis before they head down this road.

Again, I'm not saying the brokers here do this as from what I have seen on the panel most are highly rated so I would not expect this to be the case.

Ideally - the client doesnt care about the brokers clawbacks at the end of the day (nor why should they) as much as the broker does if it comes down to them saving more money on a better offer - notion being it is better in their pocket, and if they are paying a higher rate then they figure the broker (or bank for that matter) isnt doing his job when this is pointed out to them that they could achieve the same with another bank at a better rate.

I see comments on the forum that a bank cant afford to do this widescale, perhaps this is true enough... but yet for the 'right client'... this isn’t the case.

Must go, have a plane to catch.


Cheerio

Saint.
 
Hiya Saint

I dont agree, in general, that price is the end yard stick (or KPI) of a service or product, for it it were, (a broker and lenders in general) would not be able to make a living and the Homepaths and the No frills securitised lenders would get 99 % of the business.

Im happy to say (I assume) that most of my clients do care about clawbacks and that we do get appropriately renumerated.

If a client comes to me chasing rate, I need to point them to Homepath or the like. I cant add value to such a request, nor do I want to....... I have always been taught that Price "is the refuge of the weak" in sales, especially in service propositions.

Finally, and I have no issue in showing my hand here, as a broker, you are in a position to broker a win win win deal. Where there is a balance, and there is something for all, including the lender. If you price EVERY deal, youd better be very concerned for your business.

Soon, and sooner than most think, because the margins with lenders are getting skinnier and leaner, as a broker your service proposition better be able to withstand the charging of a fixed upfront fee. The erosion of profits due to aggressive competitive pricing below sustainable levels even at branch level means there has to be a give somewhere..........and its very likely that this could be at the commissions end.

ta
rolf
 
Hi Saint,

There was definately no offense taken, I just didn't think what you posted was correct. When considering what is best for a client, rate is only one part of the equation, albeit an important part. As Rolf stated service is also very important. The job is to put the client into a loan(s) that cost them the least over time, but this doesn't always mean the loan with the lowest rate is the best, particularly if they are active investors.

To answer your query re getting discounts over 0.9%, this is not difficult, it just has to be a pretty big loan. The largest residential loan we have done was $1.6 mill and that was priced at a 0.92% discount. I have heard of larger loans going through with a 1% discount.

Regards
Alistair
 
Thanks to this post I have increased my % discount from 0.7% to 0.85%. Small but welcome - I'm with Westpac and have alwasy found them to be good although their policy in regards to cash bonds/annuities is a pain!
 
rambada said:
I'm with Westpac and have alwasy found them to be good although their policy in regards to cash bonds/annuities is a pain!

Hmmmm Im also with WBC and have had no cashbond/annuity issues with them. I've just set up a couple new loans last week and WBC have acknowledged my CB incomes into the DSR equation.
 
LOC or % only? Have asked repeatedly and been knocked back, this reply after your posting.

The way my applications are assessed - I can use cash bond income but have the loan PIF over the remaining term of the CB as per our previous discussions.
Westpac
 
rambada said:
LOC or % only? Have asked repeatedly and been knocked back, this reply after your posting.

The way my applications are assessed - I can use cash bond income but have the loan PIF over the remaining term of the CB as per our previous discussions.
Westpac

I have LOC's & I/O IP Loans.
 
7.09% on mine it seems.

i have 2 loans with the same institution.. a fixed and a variable.
i pay a "service fee" of 8$ per month for EACH account, ie 16$ a month.
at present, these are not deductible :/

what are the odds of my going to the bank and asking them to revoke the service fee on one of the accounts (maybe the variable) if i was to open a credit card with them
 
Discount 0.8%

I mentioned to WBC that I had 5 loans coming off fixed interest and what rate could I get for $1m, noting that 0.7% discount was offered for loans > $200k.

The WBC agent immediately offered 0.8% discount. Thus var is now 7.02% - that does me until fixed rates start to come later this year.

Note that I wanted to keep the loans separate - I'm sure that WBC would prefer to bundle all together.

Tony

PS The 5 loans were previously on 5.99%, 3 years fixed - I knew I should have gone for the 5 years which amazingly was available at that time - do'h.
 
Rolf

True enough, but if a brokers business is based solely on lending alone then with the changes in the markets you'll get eaten up by those who incorporate other aspects such as insurances and financial planning. i.e. a more total package that isnt just limited to home loans. You can call it specialised but I prefer to think of it as dated.

But I still think if one of a brokers clients gets hit up by say the local kid in the branch or even another broker with a better deal rate wise - i.e. they are on 0.50% off and the guy in the branch is offering 0.70 off - I think they are going to be looking for some answers from broker #1 or simply they'll dump him. I.e. if you could switch someone from homepath and get the same loan (basically) with a better rate from ANZ most people would probably go.

the reason I say this is because I'll do it myself. If a bank or a broker doesnt keep up with the changes in markets and keep their clients on the best product then eventually they'll lose the client, and if their needs arent being met then they arent going their job.
 
0.7 off variable, no fees, no ongoing fees is so far what i've managed to help a friend with.. he's looking at less than 500k

i'd like to see if i can stretch for more, but unsure if i've managed to cover every cost involved.

banks - nab, bankwest and hsbc so far.. it's quite interesting though as NOONE has asked where i am getting these prices from.. do they just ASSUME people will pricematch and clearly they know of everything that is going on.
 
St George yesterday approved a 0.9% discount off a $1.6M variable rate loan for a client of mine.

LVR was 67% and clients were in excellent employment.

The local branch had told the clients through their regional office maximum discount was 0.7%.

Oh well there loss my win.
 
0.7 off variable, no fees, no ongoing fees is so far what i've managed to help a friend with.. he's looking at less than 500k

i'd like to see if i can stretch for more, but unsure if i've managed to cover every cost involved.

banks - nab, bankwest and hsbc so far.. it's quite interesting though as NOONE has asked where i am getting these prices from.. do they just ASSUME people will pricematch and clearly they know of everything that is going on.



i take this post back....

NAB WOULDN'T take off 0.8% . Apparently the guy i'm dealing with spoke to his manager he could only offer 0.7% off at 7.12% which is completely and utterly standard....

can anyone please offer advice as i've sort of pushed myself to the brink here and committed with NAB[myself and my mate].. now i just want a better rate and/or just go onto another bank that actually wants
the business
I actually told my mate and he has given up already and is not willing to ever step into NAB again
 
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