CUA frustration

My wife has a home loan with CUA, product name Accelerate variable. The rate was competitive at the time, 2 years ago let's say 3.5%.

It's since dropped to 3%, however this is too high for OO P&I. So I called the bank to ask for a discount but all they said was they cant change the rate on that product.

All we could do is pay a $300 fee to change product, now called Offset Variable at 2.5%.

This seems madness to me. Other banks you can simply call up to discuss your variable rate and easily change. But CUA wants $300 to change a variable rate. The products have identical features.

The most annoying part is we have paid the fee before, changed to the latest product. Only for this product not to reduce inline with the market, and the only option to reduce the rate is to pay another fee to their latest product which does have a competitive rate.

So they get you to pay the fee to change products, stop lowering the interest rate on that product, then bring out a new product at the lower rate so you have to pay to get the latest rate.

Am I missing something here or is this sneaky product/fee rinse & repeat by CUA? A bunch of other banks I deal with don't do this. I guess the simple answer is to refinance to another bank

 

Standard practice. That's why you have brokers to manage your mortgages. I'm not a big advocate of refinancing "just because", but in a situation like this, where you have consulted the lender, they're not dropping the rate, then it makes sense to take it elsewhere more competitive and you might even get cashback for doing that.

 

Yes it is sneaky.

'Standard practice' doesn't mean fair. It just means they are all at it!!

 

Pretty Standard. Most banks have a standard nil fee basic product and a packaged product with an annual fee.

These packaged products generally allows you to negotiate the discounts while the basic product is just a set discount with no movement.

 

This is why it's not always about cheap rates. The longer do this the more I realise it's about how lenders will meet your medium and long term needs.

 

Thanks Tony that actually helps justify the fee. I've checked with the wife and she doesn't pay an annual fee. So I guess paying to change products every year or so is the same as the package fee I pay at other banks like CBA

 

If paying the annual fee and obtaining a lower rate outweighs the annual fee then you'd do it.