20 Jun Borrowers wise up to the banks – Siobhan Hayden
One result from the Royal Commission into the banking sector, that no one saw coming, is the level of independence from consumers to shop around understanding that the loyalty they held toward their bank is not being returned. Siobhan Hayden from HashChing has more on that development.
Kevin: With so much talk about what’s happened through the Royal Commission with the banks, many people are wondering how they can go about getting a better home loan. What’s their relationship with the bank? What’s it going to be like going forward? Joining me to talk about this is Siobhan Hayden. Siobhan is the CEO of HashChing.
Siobhan, thanks again for your time.
Siobhan: Thanks for having me, Kevin. Nice to chat.
Kevin: There have been some revelations coming out of the Royal Commission, haven’t there? People are very concerned about what the banks have done.
Siobhan: Definitely. I suppose it’s quite disappointing to see such large institutions that people have traditionally put a lot of trust in really breaking that trust.
Kevin: Do you think that’s irreparable, or is it going to drive more people to not be as loyal to their bank? Because there has been a lot of loyalty in the past.
Siobhan: I think you definitely have the traditional view of loyalty to big banks, but that is costing people a lot of money. That loyalty is sometimes misplaced. And I think we’re also seeing an emergence in the last five to ten years – with the advent of social media and phones and consumers’ voices – that consumers do put themselves at the middle of a transaction far more than we ever did, and we care more about how we’re treated and what services were offered.
So, I think we’re getting more and more groundswell of consumers wanting to get a better outcome for themselves and think that they should be able to do that.
Kevin: Is it driving change? Are there more people who are actually getting proactive about shopping around for a better loan?
Siobhan: We’re definitely seeing it. The cash rate, as you know, in August of 2016 was sitting at 1.5%. It hasn’t changed in that time, but what customers have been seeing is basically out-of-term rate hikes on their existing variable rates, whereas new customers are being offered enticing interest rates to come and join the bank.
So, we’re seeing a trend, particularly with customers… Over 25% of our customers are on rates less than 3.7%. Whereas a year ago, 4% was enticing, now it’s getting even better.
Kevin: It’s an interesting view that because the rate hasn’t changed from the RBA, most people think “Oh, the rate that I have now is probably the best rate I can get,” when in fact, as you just said, many of the banks are offering much better rates to newer customers.
Siobhan: That’s right. Look, there are two real options: customers can get on the phone and talk to their bank, and I would recommend they do that. Not always do we have the right terminology to demonstrate we’re quite committed to changing banks, so if you can’t talk to your broker to negotiate a better rate, or of course, look at the option of refinancing.
Kevin: What sort of language should you use with the bank when you’re talking to them?
Siobhan: Definitely talking about what rates are available in the market – so, you need to know what other options are there – that you’ve been offered a great rate already by an alternative bank, and that you’re willing to move today or tomorrow if you don’t get some relief on the current existing rate that you’re repaying.
Asking for a mortgage discharge form is always a good way to say that you’re willing and prepared to move.
Kevin: What’s a mortgage discharge form?
Siobhan: It’s a form to say that you’d like to discharge your mortgage to obviously refinance a move to a new bank.
Kevin: That would be a trigger for them, then they’d want to know where you’re going and what you’re doing?
Siobhan: Yes, and they would also be aware that you’ve spoken to another bank that has asked you to get a mortgage discharge form for you to then move to them.
So, I think you need to be a bit fore-armed. We look at our health plan every 12 months; I think looking at your home loan rate every 24 months makes good sense. It doesn’t mean you need to do anything or move or refinance, but it does mean you know you’re in a good position.
Kevin: For those uncomfortable with being that confrontational with the bank– and there would be many people like that – the alternative is a broker, HashChing as an example.
Siobhan: We’re an absolute broker advocate, and brokers are supporting customers nearly 60% of the time around Australia with new residential lending. So, definitely partner with a broker.
Obviously, we have great broker partners at HashChing, both rated and reviewed, so customers can definitely come to us and find a local broker in their area.
But definitely get the professional to lift a phone and do that work for you.
Kevin: Tell me how HashChing works.
Siobhan: HashChing allows customers to come to our site. They can look at the options on deals that we have, which are all broker-introduced home loan deals. And once they’ve added their basic information and their mobile number and what they’re looking to do, we instantly partner them with a local broker in their area that they can then have personalized service to complete the transaction.
Kevin: As I said, for those who are uncomfortable and want to stay at that arm’s length, if they were to do that, is that going to affect their credit rating?
Siobhan: No. The broker working with you will first look at your financial aspirations and goals, work out where you’re at currently with your income, expenses, and your current repayments, and then ensure that you are moving to something that will make it a better outcome for you and your family.
It doesn’t necessarily mean you’re going to refinance, but it does mean that you’ll get a bit of a mental health check that you’re actually in a good position.
Kevin: Because if I were to shop around and maybe go to one of the other banks, the moment I make an application or an inquiry with them, that is recorded on my credit file, isn’t it?
Siobhan: It definitely is if you make a formal application. A number of ours are actually committed to doing the research firstly. So, you need to know before you make the application that you are moving to something that will be better for you and your family financially down the track.
Kevin: That is very much why so many people are now using brokers, because you don’t have to make that commitment there across all those home loans and can give you that advantage, can’t they?
Siobhan: Absolutely. It’s not uncommon to see a customer who comes to HashChing and says “My bank said I couldn’t borrow.” So, they think because one bank has said no, every bank will say no. That’s completely not correct.
And brokers are well positioned across nearly 30 different lenders to provide a good review of the market and what is actually possible for that particular customer.
Kevin: Yes. HashChing, we’ll put a link inside this interview so that you can get to them. Siobhan Hayden is the CEO for HashChing. She’s been my guest.
Siobhan, thanks very much for your time.
Siobhan: Thanks for having me, Kevin. Have a great day.