and here we go again for 2016... "increments" - expect more

WBC are playing catch up at the moment - got 4.04% 2 years fixed for a client today on 820k total O/O borrowing.

 

Is this only available via diamond brokers? Or any broker can have access to this offer?

 

When you say "month of February" does that mean it has to be submitted by then? Or approved by then? CBA are currently working on a 4-5 day turn around meaning the offer is basically over if it's until approval.

 

If I switch to fixed loans, can I still have offset accounts?

 

The discretionary pricing needs to be requested an approved by the end of the month.

The pricing approval is valid for 1 month so as long as you submit the loan application reflecting the valid discount, you can lock in the discount. Assuming the pricing is approved at the end of the month, you have up to the end of next month to lodge and have the loan approved.

Turnaround is at 2 days for simple deals.

 

@Watson1
So if your application was submitted tomorrow and then allowing 2 business days for review so realistically by the 2nd of March, meaning pretty much today is the final day? And of course if it is only a simple deal.

 

You could fix part of the loan and a part of the loan variable, so an offset can be used against the variable portion. If you wish to fix everything, there are a very small number of lenders where you can operate an offset against a fixed rate.

 

I obtained a pricing request for a client yesterday and the offer document states the pricing will expire on the 25th of March (1 month)

This means I need to have the loan submitted and approved prior to the 25th of March otherwise I would expect the credit team to ask for an updated pricing request and as the 1.5% is only available during Feb the chances are once the initial pricing request expires, the discount might not be as good as the 1.5% currently being offered. The key issue is to have the pricing request locked in and pricing offer document issued as you will have 30 days to have the loan approved.

 

I was told diamond only.

 

They've got some pricing on fixed rates coming out next week, still not as good as CBA's though, but with discretion they may match it. The advertised will be similar to what you mentioned.

 

Just to be clear. If I was not an existing CBA customer and wanted to refinance with them and get the discretionary discount I would need a broker who could organise that paper work in the next 2 business days.

 

Just the pricing paperwork - the actual loan would just need to be approved within a month. It shouldn't be difficult for a broker to do that for you.

 

The bank will provide you with a written offer which states the discount they have approved. The document needs to be submitted along with the application and supporting documents.

Just get your broker to submit a pricing discretion for a $100k loan <90%. It is automated so you get the approval on the spot. The pricing discretion letter based on the above approval will state the loan will need to be at least $100k and the LVR must be less than 90% which I am sure you will qualify for.

Like Jess I was told it was for diamond brokers only but it appears they have opened it up to everyone.

 

Ok thanks for that.

I don't have broker at the moment. Although it is not required at the moment how would you know if your broker was a diamond broker?

 

Ask them.

 

Probably best to just ask them.

 

Since you asked Kristo, @Jess Peletier who has been replying to your questions above, is a diamond broker. Maybe give her a call? I'm sure she'd be happy to have a chat.

 

What's a diamond broker..?

 

Several lenders categorise brokers based on various critiera around the loans a broker submits to that lender. The criteria tend to be prediminatly around the total amount settled within a given time period.

The top tier brokers get access to certain perks. Usually these perks are around guaranteed service levels, more attention from business development managers, access to trial iniciatives and better access to certain credit managers who have wider authority to make decisions.

In theory all brokers should have access to the same products and be able to get the same outcomes, it might just take a bit longer and be harder to work through.

In practice however some lenders (in particular the CBA) use it to influence brokers recommendations which can offent affect outcomes for borrowers. The volume criteria for these programs can be difficult to meet and some brokers do knowingly recommend one lender when another might be more suitable.

I am a member of several lenders higher tiers, but I'm not a fan of these programs when the lenders put in place pricing or renumeration incentives. ASIC is currently investigating mortgage broker renumeration and this sort of thing from the CBA only hurts the mortgage broking profession which could have negative consiquences for borrowers in general.

 

Further to my previous post, I'm not particuarly happy with the 'pricing' environment that's been in lending for the past few years either.

Naturally I want to get all clients the best deal possible with the most appropirate lender. We submit a pricing request for each and every loan application, but I feel this practice is ultimately bad for borrowers.

Since the GFC, lenders have periodically adjusted interest rates upwards. They've usually done this via not passing on full RBA cuts, or going beyond RBA increases. Most recently we've seen lenders increase rates to supposedly meet capital requirements.

At the same time lenders are offering progressively larger discoutns to borrowers. 20 years ago you'd get 0.7% of the published SVR (Standard Variable Rate) if you were in a list of 'preferred' professions. 16 years ago this became available to everybody as long as you were borrowing more than $250k. Over the last 5 years these discounts have steadily increased. ANZ offered 1.0% discounts (which was eventually matched by other lenders). A year ago it was reguarly 1.15% with several lenders and today the discount is 1.30% or more and the CBA is offering 1.5% off the SVR.

Whilst this is great for new borrowers today, lenders are not passing these discounts on to existing borrowers. They will renegotiate their rates if existing borrowers ask, they will often offer better deals again if borrowers are about to leave, but none of this is comparible to what they're offering new borrowers.

Ultimately this is not good for borrowers. You get a great deal today, but eventually this is virtually guaranteed to become and increasingly lousy deal. Eventually many borrowers will refinance to get the best deal but this also costs them money. Lenders are offering cash and other inscentives to refinance but that money has to come from somewhere and it's not the shareholders!

Current pricing practices don't benefit borrowers in the long run. If borrowers were more aware and proactive about refinancing borrowers would do well and the banks would loose, but that's not the case. Overall lenders do quite well out of it by effectively overcharging existing customers. Of course brokers can do well out of it too.