Do brokers give clients a ‘heads up’ that they could get a better rate?

Discussion in 'Loans & Mortgage Brokers' started by Joynz, 16th May, 2020.

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  1. Joynz

    Joynz Well-Known Member

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    Is it always up to clients to raise the issue of interest rate reductions for existing loans with their broker?

    Or do some brokers take the initiative and notify their clients that they might be able to get a reduction?

    I was shocked a couple of years ago to realise (through this site) that my rate was a bit high compared to others. So I approached my broker and got a reduction.

    Before that, I would never have realised the rate was negotiable!

    Roll forward to last week and I approached the broker again and got another reduction.

    So far so good, but I wonder why I have to raise it each time? There are sometimes comments on this site about the great service brokers give - so why wouldn’t they send a client reminder to re-evaluate at intervals?

    Is it because it will affect their trailing commission?
     
    Last edited: 16th May, 2020
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  2. aussieshorter

    aussieshorter Well-Known Member

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    I'm interesting in the answer to this question as well.

    But in terms of results, in my experience a combination of having your broker put in a request and you calling the bank directly works well.
     
  3. Joynz

    Joynz Well-Known Member

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    I really mean do brokers take the initiative to let their clients know - e.g. a reminder when they notice that rates are going down or that banks are allowing reductions.

    Each time, I have had to approach my broker to put in a request.

    When I suggested to my broker that I thought it would be great if brokers took the initiative and contacted clients (when it looked like a reduction was a possibility) it was met with silence!

    If brokers really are ‘on our side’ and client oriented (and experts) this would seem a reasonable action.

    It could just be an email to all clients, or clients with particular banks etc.
     
    Last edited: 16th May, 2020
  4. vbplease

    vbplease Well-Known Member

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    It would be my expectation that the broker would follow up on rate cuts.. they should have their clients best interest in mind when sourcing finance, and while they’re receiving a trailing commission..

    Quite a few years ago I asked my broker (from this forum) about a further discount. They said they wouldn’t put in a request, but feel free to try yourself :rolleyes:
     
  5. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    It doesn't affect trails at all. Brokers basically dont know what rate their existing clients are on, unless the client tells them. This is because rates are currently changing and different rates for new clients all the time so it is impossible to keep track without the client telling them.
     
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  6. Morgs

    Morgs Well-Known Member Business Member

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    It really depends on how the broker resources & operates their business.

    Rates change almost monthly across the market so what is the best in market today might change tomorrow so this creates opportunity but it isn't always practical to review everything for everyone or move from one lender to another frequently.

    To give you an example of the way I manage it with my customer base (with active loans):
    1) Each time there is an RBA rate cut I'll email out a headline around what the cut has been and how much each lender is passing on so everyone is aware and up to date.
    2) Send our periodic newsletters/emails advising on any structural market changes e.g. recently around the implications of COVID on lending/repayment relief and the introduction of the new lower fixed rates. Had lots of requests to re-price loans and split fixed products as a result of that one.
    3) I will do periodic reviews of each active loan (6 - 12 months depending on the scenario) to ensure pricing is still relevant & explore if any action is required with the client.

    It does not affect trail commission :)
     
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  7. iloveqld

    iloveqld Well-Known Member

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    From my understanding, brokers work on getting a loan, anything after settlement beside refinance is not their works. Expectation should be set correctly as you are expecting someone work for you for free.

    However, if you are a frequent client, let's say settle or refinance at least one per year, both accountants and brokers are contacting me everytime rate changes...
     
  8. Archaon

    Archaon Well-Known Member

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    If trailing commissions are affected by the current interest rate, then I would assume that the broker wouldn't chase it up without provocation.

    If trailing commissions aren't affected, then I think it would be good business practice to keep yuour clients happy.

    The broker would also have to weigh up how much time to allocate though, if it was a 1 off client never looking to buy/refinance again, then there would be no value add micro-managing.

    If the client was an investor and looking to expand then there would be pro's to maintaining good terms with the client.
     
  9. Archaon

    Archaon Well-Known Member

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    Refinancing yearly would mean broker commissions are clawed back though, or do you mean different lengths of loans refinanced yearly?
     
  10. Shazz@

    [email protected] Well-Known Member

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    The phone call comes at the 18-24month period.. all of a sudden, there’s something better out there that requires all your loans to be moved :rolleyes:
     
  11. Jess Peletier

    Jess Peletier Mortgages, Finance & Property Strategy Aust Wide Business Member

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    Trails aren't affected by rate reviews, in fact it would help brokers keep trail BC it'd keep clients from moving brokers or refinancing directly. That said, brokers don't have access to clients current rates with most banks, so having a system to make sure clients get regularly contacted is important.
     
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  12. Joynz

    Joynz Well-Known Member

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    I have had 3 loans (that were very easy to get) over 15 years with this broker and in that time only asked them to do a loan review twice - so they aren’t having to do that much work for me!
     
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  13. iloveqld

    iloveqld Well-Known Member

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    If your loans don't have tail commissions, he is not working for you as he get paid once off or you have not paid any extra either
     
  14. Joynz

    Joynz Well-Known Member

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    Why wouldn’t my loans have trailing commissions? I assume they do as he is a broker and I didn’t pay a fee upfront.
     
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  15. Shazz@

    [email protected] Well-Known Member

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    Maybe the onus is on you to review rates of your existing loans.
     
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  16. iloveqld

    iloveqld Well-Known Member

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    Exactly and actively call the bank even if they don't have any or call broker to refinance to a better rate, waiting for broker is not the solution I try to suggest. Not to blame or say anything wrong with anyone. Anyways I move on lol
     
  17. Joynz

    Joynz Well-Known Member

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    Hence the post - because I was thinking that it’s not the best customer service.
     
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  18. Lindsay_W

    Lindsay_W Well-Known Member

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    Regularly review and adjust client rates every 6 months, I understand not all brokers do this.
    I'll put this question to you, why doesn't your BANK adjust your rate or tell you there's a lower rate available? After all you are paying them much more than what the broker makes and I've seen plenty of clients who went direct to their bank and got stiffed on the rate initially, paying the standard rate with no discount
    .
     
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  19. Lindsay_W

    Lindsay_W Well-Known Member

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    Yeah - you need a better broker :rolleyes:
     
  20. Joynz

    Joynz Well-Known Member

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    My bank does adjust my rate when the reserve bank does. But fair point.

    But I got the loan through the broker (three loans so far) so I am his customer first!

    I started thinking about this because when forum members mention going directly to a bank they usually get advised by members to go to a broker for, among other things, better service.

    We tend to trust brokers more than banks because we believe that they are ‘on our side’.

    So I started to wonder if that better service includes this sort of update...