If you put the word "mortgage" together in the same sentence as "war", you've got a fair chance of grabbing the same level of attention as putting the words "foreshore" and "seabed" together.
Makes sense I suppose, because most of us like to go the beach, and around a third of all land in NZ is subject to a mortgage. So these are popular topics. Almost as popular as "tomkat" and "divorce".
Not a week's gone by recently when people haven't asked me if there is any truth to banks falling over themselves to lend money.
For example, this came via email from a prospective client late last week and is pretty typical: "My question for you is whether you think the [newspaper's] picture of banks scrambling for business is an accurate one?"
The answer to that is yes and no.
If you think "mortgage war" means banks are dishing out loans willy-nilly then you're well off track. The behaviour I see from banks indicates they remain fairly prudent in terms of giving an approval and the old days of 2006-2008 where lending criteria amounted to "is he breathing?" are behind us. You've still got to make the grade.
If there is a mortgage war going on it's being fought on the basis of price, i.e. interest rates and other concessions, but only once that all important approval is in place.
More to the point, customers who are in a strong financial position stand to get the best deals, naturally enough.
Stories of 4.9% floating and banks covering breaks costs are absolutely true but, they are reserved for the best customers.
Put your hand up if who've been to the bank and asked for a discount recently?
I'd say most people have and in almost all cases the bank will oblige. But I know some people have still come away feeling a bit disgruntled. Feeling like their bank doesn't love them as much as a mate who also banks at the same place, especially when media reports paint a picture of blood on the banking floor.
There's a hidden truth here which amounts to something we all know but don't like to admit - that there's usually a gap between how wonderful a customer we think we are, and how wonderful a customer we actually are - at least in the banks' eyes.
What makes the difference?
· Loan to value ratio is a biggie. The lower the better, and loans which are less than 80% of property value represent a key threshold. At 50% and below banks will really bend over for you.
· Bulk discounting applies to banking as much as it does anywhere else where loans north of $500,000 have more pull than smaller ones.
· Your track record on mortgage repayments and bank account conduct are also important.
Of course, most people present a mixed picture with different strengths which is why two customers who appear the same outwardly can be treated quite differently.
In the cold light of day does your financial reflection look as good as you think it does? If so, you could well be a winner in the mortgage wars but don't expect this level of banking competition to last forever.
Campbell Hastie is a mortgage broker from Auckland firm Go2Guys.
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