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Porges blasts 'bait and switch' lenders

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Australian Broker | 15 Mar 2012, 07:00 AM Agree 0
Aussie Home Loans chief executive Stephen Porges has taken aim at “bait and switch lenders” who are enticing customers with rates that are “underwater”
  • Garry | 15 Mar 2012, 10:32 AM Agree 0
    What a load of rubbish. The lenders are able to calculate the ROI for each loan and these calculations take into account commissions to the broker and the true cost of the funding. If the lenders cant afford the rate cuts then they wouldnt do it. Its almost proof that the argument regarding funding costs is not entirely based on fact. The banks are simply in tune with what the clients want and are prepared to meet the market and I say good on them. These discounts are primarily for the top brokers only and are not advertised to the general public so its not a real issue as the volume of deep discounting will not be large.
  • Kym Dalton | 15 Mar 2012, 10:39 AM Agree 0
    Hear hear. The focus on the short term is endemic and inappropriate- these loan terms are for 30 years, exit fee bans notwithstanding! When I first visited my (then) corporate cousins at ABN AMRO mortgage is the U.S. in the mid 1990's they absolutely thought I was kidding when I said the prevelant mortgage in Australia was a discretionary variable, not tied to a benchmark. Their direct comment was that this would invite bait and switch tactics. Maybe we should establish a bank 'consistency rating' for variable rate performance over the recent past and for the medium term? This would assist with meeting responsible lending obligations as well.
  • Country Broker | 15 Mar 2012, 10:53 AM Agree 0
    I must agree with these comments, bait and switch is happening, having variable rates structured as they are allows this , APRA need to look at this and ask the hard questions, it can only be assumed only the very niave or lazy borrowers are paying standard rates for a home loan. We will see an increase in broker activity as these BAIT AND SWITHCH LOANS , come out of the discounted rate term and revert to the real rate.
  • John | 15 Mar 2012, 10:59 AM Agree 0
    Garry, you can't tell me that Ubank selling a loan today at 6.23% is not underwater!! Their deposit rate is 6.01%, you can't tell me that a spread of 22bibs gives them anything other than a loss.
    There are other factors going on behind the scenes that you would not be privy to which are motivators for some lenders "especially NAB" to increase their book size irrespective of the short term profitability. I'ts a long term strategy that effects ratings, capital requirements and other more technical issues.

  • Lawry | 15 Mar 2012, 12:30 PM Agree 0
    My reading of his comments is that they were targeted at lender like Ubank just as John has identified. BankWests current on line deal and a few others are in the same boat. I think that creating all these extra channels is a bit crazy. In fact OneDirect did all this a few years back and then was shut down, just as was Homepath. Its nothing new, a the customer only ever gets a short term benefit.
  • John | 15 Mar 2012, 01:13 PM Agree 0
    Agree Lawry, have a curious business plan, I dont expect them to be a particularly long term player in the industry.
  • ozboy | 15 Mar 2012, 01:27 PM Agree 0
    You are correct Mr Porges but I have to ask have you taken this up with your Chairman as your current ad campaign is using this tactic to drive new business for Aussie. So while you disagree with the tactic you will promote it for your own gains. Mmmm.
  • Positive Broker | 15 Mar 2012, 03:04 PM Agree 0
    Totally agree. Any broker selling on the "cheapest" rate nowadays is inviting trouble and unhappy customers. I routinely ignore lender specials when comparing products.
  • Cheap Cheap | 16 Mar 2012, 09:27 AM Agree 0
    What motivates competition in the mortgage market? CHEAP RATES & DEALS.Client's BUY.
    You may be the best salesperson in the world, but a loan at 6.5% against a loan at 7%, comparing "APPLES for APPLES". 9 times out of 10 you lose.
    We are a capitalislic society & regardless of what Socialist government is presently trying to run this country, let me assure you greed is alive and well. Client's want the best rate, we want the business.
    Whether it is the right or the wrong way, short term, only time will tell.
    Our new credit act makes it a "players" market. No DEF's, move whenever, when the "PRICE IS RIGHT."
    Come on Down.
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