Bank-xiety – When did the bank rate go up?
Last week the federal budget was announced (read government promises regarding tax payers money) and the official bank rate did, well, nothing. Again. I thought about writing an email regarding the budget, but to be honest, I wasn’t interested in reading it, let alone regurgitating it.
I was riding in the back of a cab in Sydney over the weekend and I saw an advertisement for ME Bank titled ‘Bank-xiety’ – which I thought was quite clever. The definition was ‘A feeling of worry, nervousness or unease about something you know your bank is up to’. It resonated with me. I don’t know about anyone else, but I feel like as a country we’ve been doing the equivalent of the Apple rainbow wheel for a bit too long now, and maybe complacency is starting to set in.
Previously we have been able to have some form of predictability around where the rate might be headed, and the economists have been pretty accurate in their predictions. The last few years however, there has been claims of ‘three rate hikes in the next year’ and ‘rates will soar up to 2% higher’ – the result? Even a quarter of a percent on an average home loan can make a massive difference to your 30 year commitment.
No real change.
Now, you might have realised where I am going with this. You might be thinking ‘hey! When did the bank rate go up?’
They do it so gradually, and sneakily that you may not have noticed. Until your rate is nearly 2% higher than the ‘new to bank’ advertised rate on the same product (which basically means they are buying new business and paying no regard to their existing, loyal and somewhat sleepy customers).
The answer is simple really. They are a business.
They essentially buy your new business at an amazing low rate, and they treat you really nicely and justify your decision to leave the last bank by telling you how they would never do the same things. Then, once they’ve lulled you into a comfy slumber, they kinda just forget about you. Leave you alone. You’re happy. We live in a fast paced world, things are zooming around my head some days so fast I don’t know which way is up. It’s really easy not to prioritise things like your home loan.
You generally have a home loan for 30 years. Even a quarter of a percent on an average home loan can make a massive difference to your 30 year commitment.
It’s worth keeping a close eye on what your bank is doing, and more specifically, not doing.
Better yet, let us do the leg work for you.
We relish in keeping them honest.