Beware of this cunning trick

If you have a mortgage, you’ll have noticed that interest rates have dropped. Your bank may even have contacted you with a low, low rate.

Proceed with care because there may be a fish hook.

We’ve seen a trend of banks contacting customers who are due to renew their fixed loan. The email arrives 13 weeks before the rollover date, with a tempting new rate. Just click on the link and grab this great rate…

The risk is that you miss out on an even lower rate in a month or two. With two OCR announcements before your mortgage rolls over, rates could go even lower. In the current climate there’s absolutely no need to refix early.

The underlying problem is the lack of advice. Get the email, click the button, job done! It appeals to the impulse many of us have, to get things sorted without mucking around. But doing so could cost you thousands of dollars. 

So what’s the alternative?

When clients are due to refix, I treat it as a golden opportunity to save them money. Instead of taking the first offer the bank sends, we go to the market and see what’s on offer. It’s part of our service, and it costs you nothing.

So when the bank sends you an email or letter with a tempting offer, what should you do? Send it to Bevan or me.

A five-minute chat can reveal all sorts of information that might lead you to a different and better conclusion. We will confirm when the OCR announcements are due and work out whether to refix immediately if rates are heading up, or hold off if they are on the way down.

As an aside, I’ve found that clients who review their loans ever year tend to be the ones who get rid of their mortgages fastest. And remember - we don't charge for this service.