Is rate creep a bank’s version of a loyalty tax? (And how to get the family home back from the bank)

Rates have gone down over the last few years, they’ve gone down a lot. As home and business owners come off of fixed loan periods or if they’ve got multiple products with a lender they might find something’s not quite right. 

Case in point, I had to make a call on behalf of a client last week to a lender. The client’s fixed rate period had come to a conclusion for their home and investment properties and their revert rate (the rate the loan reverts to when it converts to a variable loan) was nearly a full 1% higher than what that lender was offering to entice new borrowers. 

Scandalous? 

Nope, pretty run of the mill actually. 

One of the best ways a borrower can save over the course of their loan is to check or make sure they’re with a broker who checks in with the lender to see if they’re getting the right deal. Asking for a pricing review, particularly if you have multiple properties and sizeable loan portfolio can save you plenty over the loan term.

If you’ve been thinking that the above scenario might apply to you but you’ve also got a business overdraft account secured by your family home, you might find your rates have creeped up by even more than 1% compared to what’s available on the market. 

Unlike phone companies that give you more data, discounts and benefits for the more services you have with them, customers of business banks complain that they hold on to more security than they need and that rates go up straight away but don’t move down in quite the same way. 

Case in point was a recent customer who came to us with a couple of investment properties financed at a major and the lender had a hold of the family home to cover their business overdraft account. Their investment home loan rates were almost 5% in a market where they should definitely have been a 3. If our customer was new to their bank, they would have been offered that so it wasn’t a hard decision for them to move on. Invoice finance secured a line of credit to support their business without property security and it’s a facility that can grow as their business does, without being limited by the amount of equity they’re holding. Long story short, better rate and family home not held by a lender. I don’t care how strong your business is, that seems to make everyone sleep better at night.

If you can’t confidently think of your rate off the top of your head it’s worth grabbing a statement and having a check. If it’s where it should be and you’ve got the services you need, that’s great. If it’s not where it should be, maybe it’s time to do something about that.

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