You know banks are in trouble when they’re raising cash from investors, cutting dividends and selling assets. And they’re doing all of them at once. A couple of big banks have been in the news lately re all of this.

My old boss used to say: “Wait until a bank is raising capital for the third time. That’s when you’ll see blood on the floor. Go in and buy with your ears pinned back.” He was a savvy investor, who cleaned up by selling near the top of the market in 2007 prior to GFC.

Paddy Boyal is the author and is a mortgage broker & was a licensed financial adviser. M: 0420 589 194 E: paddy.boyal@southeastwealth.com.au

Borrowing money isn’t solely about the lowest interest rate. Banks with the lowest rates won’t lend to everyone. What’s really important is you need to know if you’re not being taken advantage of, which tends to happen the longer you stay with the same bank. As all have seen it, you bank advertising a cheap rate to attract new customers but would not pass you the rate cut.

The cost of money (interest rates) has been a roller coaster ride since 2015. For three years, money got harder to get. Things have started to loosen. Loans are easier to get than they were years ago. During the tightening period, interest rates became splintered. Investors started to be charged more than homeowners. And interest-only borrowers were also slugged more than those paying principal and interest.

But while rates seemed to go only one direction for a period, competition has returned. Banks are doing deals again. And if you haven’t pressed your lender for a while to sharpen the rate they’re charging you, you’re probably being treated as a second-rate customer.

Banks will NEVER proactively reduce your interest rate. In the history of the world, it has never happened.

They might give you a better rate if you ask nicely. But don’t expect it. Generally, they won’t act until they see a credible threat that you’re walking your business elsewhere.

Banks look after nothing but their own bottom line. You need to do the same.

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