It’s not the demise of the National Bank brand which is getting borrowers talking to their brokers about switching banks, it’s a decision by another bank which is getting the phones going.
Brokers spoken to by mortgagerates.co.nz say that Westpac’s decision to hike its floating rate by 15 basis points has got people talking about moving banks.
One well-respected broker, who wished to be unnamed, described Westpac’s decision as “insanely stupid.”
He says they should immediately reverse the increase.
Another described it as “nuts”.
Brokers spoken to couldn’t understand why Westpac has increased its floating rate when home loan rates have been flat or falling.
The logic behind Westpac’s move is unclear. One possible reason is that it is trying to shift customers to its fixed term rates.
However, it is generally considered that banks have better margins on their floating rate products, rather than fixed.
Another possible reason is to increase profits.
However, this seems short-sighted, the broker says, as it is disenfranching its most valuable customers.
He said it takes a lot for his clients to ring him and complain, but he has had numerous calls since Westpac made the decision.
We asked to speak to someone at Westpac about its pricing strategy and were furnished with the following written response: “Westpac's mortgage pricing approach takes into account the dynamics in what is a highly competitive market.”
“We aim to price competitively. In particular, our everyday floating rate is well matched to market. On fixed rates, we are priced competitively at short to mid terms.”
Sigh… Please don't tell me we are talking about Westpac's increase to its Choices Everyday Home loan product (revolving credit) effective from the 29th September? This took Westpac’s advertised rate to 5.75% p.a. This is old news folks!
Yes I agree. A silly even stupid move by Westpac but as any half decent mortgage broker knows there is plenty of scope for negotiation on floating (and fixed) rates at present with the banks. Westpac's advertised floating (Table) home loan interest rate is 6.24% p.a. currently but as brokers know (or should know) is very easily discountable to be competitive with the other banks. I have often asked Westpac why this rate is 0.50% higher than their competitors and they don’t seem to know why. The cynic in me says that Westpac wants its home loan customers to commit to a fixed rate but then all the banks are actively encouraging this at present.
Oh and by the way ANZ & National Bank (as they still exist when I type this email on Friday late afternoon) currently have the highest advertised Revolving Credit home loan rate of any main bank in New Zealand at 5.85% p.a.
On 29 October 2012 at 11:14 am Eric said:
@Amused Yes the change was announced some time ago, but the point is this.
Many Westpac customers only received their notice recently so probably weren't aware.
Secondly while media attention is on the ANZ NBNZ get together that is not what is getting borrowers attention. It's Westpac's decision to go up when everyone else is going down
On 29 October 2012 at 12:10 pm Amused said:
Sounds to me more like a slow day at the news room to be honest Eric. As I said very easy to negotiate this increase by Westpac back down to what the other banks are offering borrowers (or better). I guess more Westpac customers need to engage the services of a good mortgage broker who can be their advocate. None of my clients ever pay carded rates that's for damn sure.
P.S. I don't recall much flap when ANZ National hiked their revolving credit rate to 5.85% p.a. and none of the other banks followed them. Now that increase was really unjustified.
On 30 October 2012 at 1:27 pm Freddie B said:
I asked for an additional 15 point discount to keep inline with what I could get elsewhere as well as some fixed rate options. After two weeks received a flat "sorry we are unable to match that", annoyed I went to market to find offers of $2-3k cash plus better rates - that makes it worth the hassle
On 31 October 2012 at 8:52 am Phil said:
Like everything else, Westpac is negotiable if you can talk to them. I went to the local branch and told them how it was if they were going to hike my choices rate as per their letter to me. Within 5 minutes my rate was back to where it was. You don't need a mortgage broker to do this at all!
On 6 November 2012 at 10:36 am Paul Carrick said:
As an enterprise ,you price according to where you want the customer to be directed to..
6 Comments
Yes I agree. A silly even stupid move by Westpac but as any half decent mortgage broker knows there is plenty of scope for negotiation on floating (and fixed) rates at present with the banks. Westpac's advertised floating (Table) home loan interest rate is 6.24% p.a. currently but as brokers know (or should know) is very easily discountable to be competitive with the other banks. I have often asked Westpac why this rate is 0.50% higher than their competitors and they don’t seem to know why. The cynic in me says that Westpac wants its home loan customers to commit to a fixed rate but then all the banks are actively encouraging this at present.
Oh and by the way ANZ & National Bank (as they still exist when I type this email on Friday late afternoon) currently have the highest advertised Revolving Credit home loan rate of any main bank in New Zealand at 5.85% p.a.