Weekly wrap - Friday 29th January

A huge first month of the year

January, traditionally, is always a big month but the numbers this year are incredible. Over 80% of our settlements for all clients this month were for new purchases. That's a huge number. We're also working on lots of refinances. It feels like in general, we have a huge amount of work with clients at the moment. 

In that context, we’d like to share a client's story. We worked with them last week; their loan was just under $500,000, with a 3.99% fixed-rate. We're now at 1.99%.

To put it in some context, that means a saving of $10,000 a year just in interest rate deductions, with no additional payments. These clients are going to shave up to 11 years off their home loan term and save a little over $70,000 in interest.

But they are in a position where they wanted to add an additional $500 per week to this and take advantage of, not only a) the reduction in the rate but b) an ability to get ahead even further on that lower rate. That additional $500 a week for them, with that reduction, is suddenly going to shave 20 years off their home loan term and nearly $120,000 in interest. It is mind-blowing. When you sit down and put those numbers into play, an extra $500 a week equals $25,000 a year. Over four years, that's $100,000.

For a lot of existing clients, we do a yearly check-in, an annual review, milestone, definitely at a fixed rate. What does refinancing mean for them?  It means that clients who took a 30-year home loan at 5% or 6% are able to pay it off in seven or eight years at 1.99% with the same repayments, which is really exciting. We don't work for the bank. We don't want you to have a 30-year loan term. We want this thing gone as quick as we can.

Banks assessment timeframes

We recently had our monthly catch-up, via Zoom, nationally as a group with Loan Market, Sam White and the team. There was talk with a number of heads of banks about the assessments delays that we've also been talking about. Why is one bank taking six weeks to get something done? Why is everything taking so long? The update we want to give today is that the banks see it, they feel it, they know about it, and it is an area of concern for them. One of the majors had put on 200 new staff since December. They want to fix this as fast as they can.

We have access to banks that can still do it in four or five days. But some banks are going to take six weeks. So if you're thinking about doing anything in relation to finance, lending, purchasing or refinancing at the moment, it is very important to reach out, have a chat first and ask yourself before you start that exercise: can you meet the timeframes?

It is our role as a broker, among many other things, to always work in your best interest. And sometimes our timeline can have a huge impact over maybe a difference in an interest rate or a type of benefit or feature. It's part of what we go through, which means a lot of hours. We start with the client first and the bank last. We identify what's important to you. What do you need? What are you looking for? Then we go to the banks that provide that. Do you qualify? Do you service? How much deposit? What are the repayments? What are the rates? We go through all of that and come back to you with recommendations. Then together we make a decision.

The very last thing we do is actually approach the bank. In our world, the bank is the vehicle. And that's always going to change case by case. There is not one bank that fits all types of models. The banks are definitely aware of the time frames issues. But if you work with a broker, we can help manage that for you and help steer you in the right direction.