According to a survey by my aggregator, Connective, 63% of bank customers will use a broker the next time they need a loan. Furthermore, 96% of broker customers will return the next time they need a loan.
When clients ask me about getting a better deal on their mortgage rate, I advise them about what is achievable from others and suggest that they give their bank a subtle ultimatum, in which the underlying message is, “Match the current market rate for my situation or I’m leaving.” While I’m happy to make it as painless as possible to switch banks, far less time and effort is required by ‘demanding’ that your bank do the right thing and reward your loyalty.
I, too, was among the vast majority that expect their bank to ‘look after me’ as rates fall. But, the headline rates are only the starting point, because good brokers know that securing the best available discount (sometimes well over 1%) to the standard variable rate is the real objective. Don’t expect your local bank branch office to ring you when available discounts are increased, because branch personnel have incentives to withhold discounts. That’s where the ‘demand’ can sometimes yield the desired result, but only if your branch can’t afford to lose you. But, there’s an even better way.
The most powerful department in most banks is the one responsible for client retention. So, ring me to learn what is reasonable to expect, then find the Retention Department in your bank to request an increased discount. If they refuse, I’ll help you switch.
Small and medium sized enterprises are paying over 2% more for finance than homeowners and big business. The banks are justifying the difference in terms of their cost of funds and risk premiums. According to an article in today’s SMH, the executive director of the Council of Small Business of Australia, Peter Strong, said business customers were a soft touch.
”It is an easy target and there’s not many people there to defend us.”
Small businesses should increasingly look to use brokers to organise their financing rather than going directly to banks, he said. This would bring more competitive tension to the market.