Why Loyalty To Your Lender Doesn’t Always Pay

This article is about why loyalty to your lender doesn’t always pay, but before we get into that…

Firstly, you may not have known OnVenture professional services group has its own finance brokering business called OnVenture Finance.  You might be wondering why we have a finance business and how this benefits you…

As an OnVenture client you gain the following benefits from working with one of our expert Mortgage Brokers:

• Our over 20 years’ experience in helping business obtain loans and asset finance regardless of their cashflow circumstances
• Incredibly competitive home loan rates from 4.81%* or 4.84%* with offset accounts and cashback incentives of up to $5,000
• Investment property experts who work with a team of Property Advisors to help you make better informed decisions on your property portfolio
• Proactive and FREE annual interest rate reviews as we are always looking to save you money and help you pay your mortgage quicker
• Our advanced debt structuring strategies developed by our team of Tax Accountants, Financial Planners, Lawyers & Estate Planners, Property Advisors, and expert Mortgage Brokers which can assist you to build your property portfolio and pay off your home mortgage within as little as 7 years^
• Plus, much more…..
• Check out our new webpage on Finance solutions on the following link and we will also let you know when our new website is launched in about a month: HERE

Anyway, let’s get back on subject, why loyalty to your lender doesn’t always pay!

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After massive property and finance activity in the last 3 years, ‘Australia’s big four banks made huge profits as Australians took out bigger mortgages for pricier housing’. In fact, a whopping $28.5 billion in combined cash profit (after tax) was enjoyed by the big 4 for FY22, up 7.2% on FY21¹.

To think they were complaining how other lenders are eating into their margins just 12-months ago!

With interest rates continuing to rise, new loan activity has slowed right down.

This is due to a few factors.

1.  Fixed loans no longer attractive

According to Rate City in June 22, almost 40% of borrowers were in fixed home loans not set to expire until mid 2023².  If you are one of these, you should get in touch asap!

Twelve months ago, for example, the average BIG 4 forecasted average rates where to be 2.86% and now they are forecasting that to increase to 6.86% by May-23³.

2.  Consumer sentiment

When there is uncertainty in the property and finance market, buyers and sellers tend to be more conservative and wait for the property cycle to begin again. This leads to less participants in the market.

This has driven lenders to introduce enticements to attract new business.

So what are the lenders doing to generate new business? And why are we telling you this?

With mortgage brokers now dominating the lending space and delivering up to 66.5% of all new residential home loans⁵, some lenders are offering significant cash incentives to attract new customers via the broker channel. Some cash incentives are as high as $5,000 and some include conveyancing rebates and QANTAS frequent flyer points. You would be surprised at what they are offering us to use at our discretion.

THIS PARTICULAR DEAL IS ONLY AVAILABLE THROUGH MORTGAGE BROKERS.

Of course conditions apply and there is strict eligibility criteria, but the reality is 8 months ago as a home owner you were looking at the potential of having to find (as a national average) an additional $600+ per month with interest rates increasing by up to 2%⁵.

With some of the incentives we may be able to offer you, we can potentially help you in advance with the potential huge mortgage repayment increases if you meet these criteria.

Learn how to prepare for your complimentary interest rate review

It is typical for some lenders to reward NEW customers with incentives to switch instead of looking after their existing loyal customers. Please don’t feel as though you need to return any loyalty.

However, there are a few lenders wanting to repay your loyalty. As there are so many options available now, we recommend we do the groundwork for you to source those that might be appropriate for your consideration.

In fact, the Australian Competition and Consumer Commission (ACCC) in their final report of the Home loan price inquiry highlighted that ‘Australians with older home loans were paying significantly higher rates than new borrowers with newer home loans, potentially missing out on thousands of dollars over time’⁶.

With 55% of borrowers not knowing their mortgage interest rate⁷, I want to finish this month’s conversation with two questions.

1.  If your loan is NOT currently fixed, ‘Do you know your interest rate?

No? You need to call us for a rate review.
Yes? You need to call us for a rate review.
Not sure? You definitely need to call us for a rate review.

2.  Are you coming off your fixed rate in the next few months?

Yes? You need to call for a rate review to plan in advance for your next loan.

With so much finance and property doom and gloom media hype at the moment, let us put a smile on your face by reviewing your current finance products to see how we could help reduce your mortgage repayments.

* Rates subject to change.
^ Strategies to reduce the term of your mortgage depend on your willingness to adopt advanced debt structuring strategies, your investment decisions and specific circumstances.

Sources:
1.    mpamag.com/au/news/general/rising-interest-rates-boost-big-four-banks-coffers/426833
2.    abc.net.au/news/2022-06-14/mortgage-interest-rate-loan-fixed-or-variable-big-four/101148702
3.    ratecity.com.au/home-loans/mortgage-news/high-will-rates-go-here-experts-think-rba-cash-rate
4.    MFAA quarterly broker statistics Dec 2021
5.    theguardian.com/business/2022/apr/29/interest-rates-are-set-to-start-rising-what-does-that-mean-for-mortgage-holders-and-homebuyers – Date: April 2022
6.    accc.gov.au/media-release/home-loan-borrowers-missing-out-on-significant-savings-by-not-switching
7.    MPA Magazine 03/06/22