More Aussies bargain hunting when it comes to their mortgage
Gateway Bank has released their latest Mortgage Holders’ Sentiment Report, and it looks like Aussies never tire in their search for better rates.
Of the 1,001 Australians surveyed, 72% said they wouldn’t shy away from shopping for a better deal, and 10% stated they were always looking for better home loan deals.
13% of respondents were planning to refinance within the next six months, while a total of 28% were looking to do so within the next twelve months.
Paul Thomas, CEO of Gateway Bank, said this speaks to an increased willingness among Australians to be more proactive with their finances.
“We’re always interested in the sentiments of our members, and the latest research confirms what we already know: Australians are becoming more interest rate and price sensitive, and they’re prepared to go out and test the market to get the best deal.”
What does this mean for banks?
Unfortunately, it means many banks may be directing their energy more towards gaining new customers than keeping the ones they have happy.
This tendency to neglect existing customers is a big part of why Australians feel so energised to shop around, and according to Thomas, banks should be revising their attitudes.
“We shouldn’t be neglecting customers once they’re in the loan book – retention should be just as important as procurement,” he said.
“At Gateway, being customer-owned means we’re focused on making sure our Members continue to get the best bang for their buck, and are on the most suitable product while they’re banking with us. The key, for us, is to put the time into understanding our Members’ needs and supporting them throughout the life of their loan, and their various life stages.”
What challenges will mortgage holders face?
While the Gateway study found that almost three quarters of mortgage holders are actively looking for better rates, the path to refinancing a home loan won’t necessarily be easy. In fact, Australians face more obstacles now than they likely ever will.
There are a number of reasons for this, but the biggest one is the Banking Royal Commission, which has done more to change the way credit providers assess loans in Australia than anything else in recent history.
Lenders are now doing all they can to gauge whether or not a customer has the ability to pay back a loan. Some are asking for a minimum of twelve months’ worth of credit card statements, or flagging things like excessive spending on takeaway food and movie tickets.
“That would not have happened prior to the royal commission,” said Thomas. “My concern is the pendulum has swung absolutely the other way and now there’s a deep dive occurring, to the point where the analysis is almost forensic.”
“It may take twelve months to swing back to a sensible equilibrium.”
Until then, banks are still going to lend, but they’ll be exercising a lot more caution.
“No one’s suggesting that we’re turning off the tap. But certainly, once the report is released, borrowers can expect to find a significantly more robust assessment of their capacity to repay. There is no doubt about that,” Thomas said.
How can Australians improve their chances of refinancing?
So what can Australians do to put themselves in the best possible position to refinance?
“The answer is just be open and honest. Don’t overstate your income and don’t try to hide your expenses, because if someone discovers that it’s not going to go over well,” Thomas advised.
But if you’re someone who has a tendency to splurge, you’ll find yourself in a tough position. You might not be outright declined, Thomas suggested, but you might be asked to come back only once you can prove you have a different attitude to money management.
“I think that there may be a need for those individuals to change their spending habits, and it may take six months for a credit provider to be convinced that they’re now operating their household in a prudent way.”