Real Wealth opinon
Posted on February 22nd, 2016 at 10:45 AM by David Orth
‘Back in the day’ the RBA set interest rates and the bank’s home loan lending rates would adjust up or down accordingly. Nowadays it appears that it’s much different.
Remember all those times that the RBA lowered rates but the banks would only pass on some of it? In much the same way as when the price of oil dropped but petrol didn’t, just recently some banks actually INCREASED their interest rates when the RBA lowered theirs.
The justification according to the banks: lending has become more expensive. I don’t buy that excuse. I have an alternate theory: the banks seem to change their rates on…….whatever makes shareholders happy.
It was either the CBA or NAB - I can’t remember which - that didn’t want to miss their performance target of $4,000,000,000 in profit. So in order to reach their target they increased interest rates to make more money. It’s crazy that we have to pay excess amounts so a bank can make billions to keep shareholders happy.
All these changes - a little bit here and a bit over there - has caused dramatic shift in the interest rates and changes between lenders. What that means is if you aren’t checking your interest rate you are probably paying too much. It’s just not the same as it used to be.
I personally was one of these people. I’ve had loans with the NAB since I brought my first house when they cost under $200K. I thought they pretty much were all the same - I was wrong. Apparently being complacent cost me tens of thousands of dollars.
It’s a lot like the traders who made hundreds of millions during the GFC as highlighted by the recent Hollywood blockbuster The Big Short. To make what is now possibly the greatest trade in history - all they did was look.
Fed up with helping banks achieve their profit targets – all I did was take a look.
It was surprising what I found, for example - did you know there are lenders out there now that allow FIXED mortgages with an offset? This allows you to lock in these mega low rates for several years but still make extra payments to reduce your interest and withdraw those payments whenever you want.
I warn you however that looking isn’t without its challenges. Whatever you do, don’t fall for the comparison websites like I did – although convenient on first appearances there’s enough terms and conditions to sink a ship. Eventually like most my endeavours in self-improvement, I gave up after a few hours of incompetence.
This is where it got interesting, Google being the all-knowing marketing robot obviously noted that I was searching and began presenting ads to me. It apparently wasn’t by chance that I stumbled upon a service where someone can look for me.
If they find something that’s going to save you money they’ll let you know. Very similar to a lawyers ‘no win no fee’ If they can’t find something they don’t charge. You can request the service here.
And there you have it – how my frustration with the bank, incompetent Google searching, failed self-improvement and sneaky targeted Google advertising saved me at least $10,000 a year.