Westpac rate rise on some accounts

I just noticed that Westpac has raised the interest rate on 2/4 of my loan accounts.
All 4 accounts are the same product, yet only 2 of them have had their interest rates put up by 0.04%.
Anyone else experience this? I'm wondering if it's a mistake or not.

 

Actuaries calculating that the - amount of profit gained on the back book > amount of profit lost by people refinancing, would be my guess. Were the loans taken out at different times?

Talk to your broker and get them to put through a pricing request to put you back down to the new business rates.

 

This has always bothered me. How can this be legal? Lenders having different rates to different borrowers (new/existing) for the exact same product (they don't even bother changing the product name). One would assume that if a lender has published rates of x.xx% on loan named abc, then all borrowers on that product will pay the same rates (unless agreed otherwise on case to case basis) regardless if they're new or existing.

 

I always suprised and disapointed that for the most part every borrow gets the same rate (nearly). The only variance comes down to how well one can negotiate. Yet the risk of each borrower is significantly different. Lower risk of default should mean a lower rate.

This is the fault of the system by offering 'products'. Bundling everyone into buckets of 'similar' products depending on a couple of variables (LVR for the most part). Then selling these buckets off.
It is also about the govt protecting the 'consumer' from the banks who, given the opportunity to risk price individually, would have a field day on the average population (more so than they do now). In reality the banks just take the lowest common denominator and price the risk into everyone. So we all pay more.
Great for the banks.

Blacky

 

Thanks but I don't feel this matter is an equivalent to buying a car.

Getting a loan is a service, not a once-off sale of a product.

An Internet or mobile plan would be a better example, I reckon. Can't imagine buying a no-contract mobile plan named XXX for $40 p/m, only to discover 3 months later than new subscribers can get that plan for $35 but i still have to pay $40 for the same plan (for the record, telco companies don't do that. They change the new plan name and tweak it a bit to avoid such issues).

And, yes, some lenders will reduce your rates IF you contact them but others won't. It's very odd that two borrowers can have the same variable loan called XXX but pay different rates because they joined at different times (unless a special deal was agreed)

 

Agreed on most points but I will add that as you mentioned rates can be negotiated and the BDMs I work with do take into account the borrower's position when agreeing to special terms.

Either way, the bank always wins ;-)

 

3 were taken out at the same time. 1 was split to create 2. The new split, and one of the other loans (not the original to the split) have been raised.
Im just glad my PPOR loan hasn't changed as its 10x the size of the others :/

 

Always a silver lining!

 

Westpac group has introduced differentiated pricing for different repayment types.

This means I/O loans are 0.04% higher than P/I loans. This was announced at the last rate cut announcement, where they passed on cuts differently.

Plenty of banks do this now, Westpac/St George have only begun this recently.

It probably explains why your PPOR hasn't moved but 2/4 splits have?

 

Again, just another one of many steps being taken incrementally by lenders to incentivise you to migrate to P&I.

Look, banks are only allowed to lend X amount on an I/O basis now. And they want new customers. And many of those new customers want I/O . And there is only so much capacity to go around, because of the 10% I/O speed limits ....

Banks also realise that many I/O borrowers dont requalify for what they already owe- let alone any new $$$, so they are going to be the low hanging fruit - just wait until you get to the end of your I/O term and try to get an extension.... strong borrowers will get one. many wont though... and where are they going to go? with servciing calcs preventing many from refinancing - the choices will be P&I or sell up.

The banks have zero speed limit on how much P&I they are allowed to write. So they wont mind I/O borrowers migrating over to P&I at all... it will just free up more I/O capacity , where they can win new customers and charge them more - because really, what do Australian consumers ever do about rate rises other than moan a lot ? The answer is - they reward the major banks who screw them, with larger market share- thats what. Now if thats what happens when Australian consumers COULD refinance freely and easily, imagine what the banks will do to those who cant refinance freely and easily anymore?

1 year in to the regulatory changes - softly softly, but early days. Now imagine 4 or 5 years from now; there are going to be lots of members here who finding I/O lending rare as hens teeth. Just another reason why cash cows will be important within a portfolio, moving forward.

The decade to deleverage....