More for me. The Banks get stingy with mortgage interest rate drops.
Yesterday, the Bank of Queensland (BOQ) was the first Australian bank to announce it will cut its standard variable home loan rate and its variable business loan rates by only 0.35 percent, when the Reserve Bank had earlier reduced the official cash rate by 0.50%. I call that stingy, if not greedy.
The BOQ has been financially troubled in recent times.
Its rare in Australia for banks to make loses, and that is what the BOQ has done in recent times. Not because of home loans or mortgage interest rates cuts, but their other risky lending policies.
Mr Stuart Grimshaw the Managing Director of the Bank of Queensland said that "continued economic uncertainty" had influenced their decision to hold back 15 basis points this month. Hope this does not mean "continued flawed lending practices." Because the bank has under performed in recent times they have suffered from “Increased competition" in retail term deposits continues to put upward pressure on the Bank’s cost of funds." More like the BOQ is out of favour with fund-raisers? My question is, did anyone at the bank get sacked for their poor lending judgements? If not, maybe its time to sack the board?
The BOQ was the bank that sacked mortgage brokers
If you are a mortgage broker who were duped by the BOQ when they closed the mortgage brokers channel, you might be guilty of rejoicing every time the BOQ hits bad times.
Shareholders will always come before mortgage customers with the bank
If you need proof of this, here is what Mr Grimshaw said. “When making decisions on rates we consider the needs of our customers and those of our shareholders. It is a difficult balancing act, but we believe passing on a 35 basis point cut is the responsible course of action this month,” he said. The treasurer's plea to pass on interest rate cuts goes unheard. The announcement follows federal treasurer Wayne Swan announcing his expectation that banks will pass on the cut. Mr Wayne Swan, the Federal Treasurer said, "The banks have the capacity to pass through, "given the fact that" they are very profitable, [The BOQ is the exception here.] "Their customers will be very, very angry with them if they do not pass through this rate cut."
Well that is true of most banks, but the BOQ is the exception here I'm afraid. Money talks, but will interest rate jilted mortgage holders walk? "If Australians are unhappy with the approach of their bank in these circumstances, they should walk down the road and get a better deal." This is the storyline that the Treasurer has been giving to encourage Australians to switch banks to save money on
mortgage interest rates.
The Bank of Queensland to hang on to the rate cute for now
Not only is the BOQ stingy, its also tardy, and will hang on to the rate cut all to itself for as long as they can.The BOQ will cut its standard variable rate by 35 basis points as of 11 May 2012, bringing its standard variable rate home loan to 7.11 per cent.
My recommendations. Give the Bank of Queensland a wide berth.
Don't even think about using the BOQ for a loan till 2015. They made many blunders with business loans and they might try to touch you for the shortfall. I recommend that you move to a non bank mortgage lender, and they have better interest rates than the BOQ and will pass on all or most of the rate reductions.
If you are with the BOQ, or any other bank, [except for maybe the NAB], I would switch banks, or switch to a non bank lender. You will save heaps. Hope this helps you save big on mortgage interest rates.
Rick Adlam: Mr Mortgage
