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The managing director of a non-major bank that has recently launched a new rate tracker home loan has said that he believes the product could help brokers improve their relationships with existing clients.
Speaking to The Adviser after launching the RBA Rate Tracker Home Loan, which shifts interest rates up or down in accordance with the Reserve Bank of Australia’s (RBA) cash rate, managing director of Auswide Bank Martin Barrett said: “I think this will help improve customer relationships with banks and also with the relationship that brokers have with existing customers as well.”
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He explained: “It must be frustrating when [brokers] put customers into any financial institution for a home loan and then interest rates move out of cycle, or they don’t get the full rate cut when the RBA reduces rate.
“It must be quite difficult, if a customer has the perception that rates should reduce by the same amount, for brokers to explain why they haven’t.
“This is a product that provides a level of transparency around it. So, when brokers are having discussions with their clients and helping [them] make a decision regarding what the most appropriate product [is] for them, if this is a product that they believe is most appropriate for their client then I'm sure they'll look to try and match them to that particular product.”
Mr Barrett has warned, however, that the product “won’t be for everyone”, because “just as quickly as the rates can move down, they can move up as well”.
Although the RBA Rate Tracker Home Loan is not yet available via mortgage brokers accredited to Auswide Bank, Mr Barrett said that he expects the product will be made available in the ‘near future’.
He told The Adviser: “It won’t be too far off, we just have to line up some of the technical components to it, and that just takes a little bit of time. It will be available to brokers in only a short period of time … Well before the end of the year.”
Despite some of the major banks saying that there is “not a viable market opportunity” for tracker rate mortgages in Australia, Mr Barrett said he believed that “in a short period of time there will be a number of institutions that offer this particular product”.
RBA Rate Tracker Home Loan details
Auswide’s RBA Rate Tracker Home Loan is available on new owner-occupied P&I home loans of $150,000 or more for purchase or refinance with an LVR of up to 80 per cent, and includes the ability to make additional payments and redraw.
There is a low, upfront establishment fee of $300 and no ongoing monthly service fee; however, a transaction account needs to be held by the customer with the bank.
Currently, the loan has a variable interest rate of 3.99 per cent per annum (comparison rate 4.01 per cent per annum).
However, the Queensland-based bank has said that if the RBA cash rate falls to 0 per cent or below in the future, the customer would continue to pay the fixed margin floor of 2.49 per cent.
[Related: Australia’s ‘first’ rate tracker mortgage launches]
