Brokers should make gimmicks irrelevant: McLeod
If brokers are doing their jobs correctly, they should be able to match any special offer touted by the banks, says Glen McLeod, founder of Edge Mortgages.
Wednesday, March 20th 2013, 1:32PM
by Susan Edmunds
ASB is offering a 42-inch television and up to $1000 cash to people who take out new loans or refix them with the bank at carded rates, even if they are existing customers.
Gimmicks have been common over the past year, as banks compete for customers in an increasingly competitive mortgage market.
That’s despite a survey done by mortgagerates.co.nz that showed few borrowers made their decisions based on such offers.
ASB’s general manager of retail products and strategy, Shaun Drylie, said the bank had decided to offer a TV and cash back because of the response to its Samsung tablet offer six months ago.
“Our spring home loan campaign Samsung Galaxy tablet offer ran for five months, during which time we provided free tablets to thousands of customers. Market share and mortgage registration data over this period have highlighted how well this offer was embraced by both new and existing customers, with both social media and in-branch discussion adding to the offer’s word-of-mouth appeal.”
The bank would not disclose how many borrowers took up the tablet offer, citing commercial sensitivity.
But McLeod said most borrowers had opted for cash rather than tablets during that offer. He said the response to the television was more 50/50. “It does motivate some people but others just want the cash.”
And he said when such an offer was converted to cash, a good broker should be able to match it by negotiating with other lenders. “If we’re doing our jobs correctly, the cash incentives should be matched elsewhere anyway.”
He said it was a broker’s job to discuss with a client whether fixing a mortgage at a carded rate and receiving a free television, or negotiating a better rate, was the better deal.
John Bolton, of Squirrel, said teasers could sometimes seal the deal. "[It's a] marketing gimmick but it gets noticed."
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