A comment posted on one of Bernard Hickeys Blogs in the New Zealand Herald on the weekend led me to change what I was going to write about this week as it was so far from the truth.
It read like this;
“The difficulty for the NZ customer now is that a true competitive market doesn’t really exist; it’s a four corner cartel of shops selling the same product at the same price. Have you tried changing banks lately? The hassle and cost of having to update valuations provides a significant barrier for most people and the banks know it. Even an unblemished history with a bank gives you no greater right of passage than anyone else. Banks adverts are a fraudulent disgrace too; banks are merely money lending brothels.”
First, I think the person that posted this comment should remember that banks are no different from any other business; they are there to make a profit for their shareholders.
Below is the result one of our Mortgage Brokers achieved by sending the identical application to three of those ‘four corner cartel of shops selling the same product at the same price’.
As the property being financed is a mix of residential and commercial the fourth ‘cartel’ wasn’t contacted as they had already told their client they would not look at offering residential rates, although two thirds of the value was made up of the residential proportion of the building.
The other results are as follows;
Bank A : the clients current bank – didn’t want to know – not contacted.
Bank B : offered residential rates and kindly reduced their upfront fee from $3930 to $2500
Bank C : offered residential rates and their upfront fee was only $400
Bank D : offered residential rates, no upfront fee, and offered to contribute $500 towards legal fees.
Yes, they all required a registered valuation on the proposed purchase, but I, and the client, didn’t have a problem with that. In fact even if the Bank didn’t require one she was going to get it done anyway after all, she was about to spend $400,000.
This example highlights a few things, the person that posted the scalding attack on Banks should have simply moved on from his bad day, as they are not all the same.
I resigned from one of them for that very reason. I could not look someone in the eye and say we can offer you the best available package when in many cases we could not.
Like any business, each has their own target market as is evident above. Each received the identical application yet four very different results.
Added to this a good percentage of Mortgage Brokers have worked for one bank or another at some stage and have a much greater understanding of the banker mindset. (Follow this link for further discussion on why Mortgage Brokers secure more loans.)
Sure I was waving a finger at a Bank in last week’s blog post, that loan was also approved by another, and I will always speak my mind, but ranting for the sake of it is something I haven’t a great deal of time for.
Brian Dalley is a leading Property Consultant | former NZMBA Mortgage Broker, and Real Estate Agent. You can read more of his views and opinions on his website www.propertyprofit.co.nz.
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