Big problems with St George Portfolio loan product

Had an interesting situation with St George Bank recently.

We signed up with the St George Bank Portfolio Loan product years ago to manage mortgages for our various investment properties in Sydney.

All of the sub loans for each IP property we fixed long term and re-fixed etc as appropriate (eg 3-5 years) at reasonable rates with the exception of the primary loan which was always variable (relatively small around 20% LVR).

We pretty much run these properties at cash flow neutral due to tax regime with the ATO running a slight loss of around $10k pa combined across all the properties (eg low LVR's with all less than 70% LVR and no issues about income affordability).

We've been happy with St George Portfolio Loan product until last year when the bank decided they no longer wanted customers on their Portfolio Loan product.....and they started NOT passing on 3 of the RBA cuts to portfolio customers....... their variable rate is now no longer competitive with other investor rates being offered by other banks (or even with their own stand alone investment mortgage product which currently isnt the best rate but not the worst either).

We called customer service at St George Bank this week saying enough was enough and to ask what they could do as their rate is no longer competitive.......only to be told that because we live/work overseas they would NOT be able to "re-consider" our variable rate as our income was in $USA dollars.

(Keep in mind we've lived/worked in New York for 15+ years.....so this was all signed up many many years ago, we lived overseas when they were happy for us to sign up with them back then on the Portfolio Loan product - i guess when borrowing more our green money isnt a problem to them then).

We asked to move the primary loan from variable to fixed as St Georges fixed rate for Portfolio Loan product is currently better than variable......only to be told you cant fix the primary loan (never came up in the many years we've moved other sub loans from fixed to variable etc)

We asked to split the primary loan into 2 - one of the features for Portfolio Loan only to be told.....because we live/work overseas they would NOT be able to "re-consider" our loan as for splitting as our income was in $USA dollars.

I appreciate this may not affect all St George customers as only 1 in 20 Australians live overseas.......but if you are ever thinking of working overseas (or maybe you have investment income from shares overseas)...... St George Bank may not be the best choice for you and you might want to consider other lenders.

For our personal situation its a toss up - i can sell down some of our TD Ameritrade share portfolio and pay out the primary loan completely (eg its less than $200k and the $USA dollar is kind of high at the moment or rather pay it down to $1 as apparently closing it isnt an option since its the primary, which we did know about).

Or i can put up with St George bank gouging us as "overseas expats" who they no longer want as a client due to APRA re-rating their loan book.

Dont get me wrong its not the worse problem in the world to have and very much 1st world problems - but its bugging me each time i look at the accounts each month and see that uncompetitive rate.

 

Why don’t you just refinance the whole portfolio through a broker....

 

No need, the rest of the rates for the sub-loans are fixed and market appropriate (also not feeling that these low rates are going away anytime soon eg so will move them off the Portfolio Loan as the fixed loans come up for renewal).

But just frustrating that St George are freezing out existing customers due to being expats.

Like i said up until the recent RBA rate cuts the Portfolio product was competitive even though a LOC product (even though we decided not to purchase any more Sydney IP's due to the treatment of Aussie expats by the ATO with the removal of the 50% LTCG discount a few years ago.......but then again we probably have another 10 years working in the USA.....so who knows that may change before then).

 

Can you do a product switch? Change the loc into a variable loan under the advantage package - get pricing on new variable loan

 

Because this is the "primary loan" for the Portfolio Loan package - no.

And i understood that at the time when we signed up.

Of course....at the time we signed up, the PL product was the same interest rate as regular investor IP rates.

Like i said my frustration with St George is refusal to reconsider current variable rate discount due to us earning USA dollars.
and
refusal to allow us to split primary loan due to us earning USA dollars 9which was an advertised feature at the time we signed up).
and
refusal to allow us to move this to fixed as its primary loan (eg 1 year i currently 4.04% which i consider market appropriate and would have been totally happy with).

Basically until the last sub-loan comes off fixed .......we are stuck with this LVR20% being on an uncompetitive variable rate (or i can sell some shares and pay it off in cash - or reduce it from $195k to $1 but you know what i mean).

(but can move the other subloans to other banks where they want our business as they come due)

 

BTW the real irony of this is we moved one of the sub loans about 18 months ago +/- to a Westpac P+I IP loan for a 5 year fixed with because St George wouldnt price match.

.....even though as you all know Westpac owns St George so its the same house/loan book.

 

Keep in mind you can always break a fixed loan to change products.

Consider the risk that they may suddenly ask you to repay the loan too.

 

A few have changed their expat lending policies over the years - and have them applied to existing customers or have differential pricing - that is very uncompetitive (NAB) for this segment of borrowers.

 

Yep not interested in giving them an upfront profit

I dont see loans going up between now and July 2020 which is when the next fixed loan comes up and i'll move it to Macquarie or some other bank.

Its only $200k eg 1% differential i could get elsewhere is costing me is costing $38 more than i should be paying.....but it all adds up and i feel if you tell the universe you arent hungry for money.....it takes it away from you.