Want to lose that home? Then get the cheapest loan.
It sounds hard to believe, but you could lose out if you opt for the lowest interest rate.
Recently, Origin brokers have expressed concern that some of the banks are taking about a month to even look at an application! Imagine if you were relying on one of these banks to finance the purchase of your dream home!
In fact, only Virgin, ING and Macquarie are consistently taking less than 10 days to approval.
In an ultra-competitive loan market, many banks are offering really low rates, which prove to be a false economy if the would-be borrower loses out on their dream property.
Typically what happens is, when banks offer really low rates, they get inundated with loan applications that they can’t keep up with.
This week, one ING boss said his bank was geared to handle 400 applications a day and made a point of not having offers in the market that risked overwhelming processing.
“Those 400 applications could become 800 applications in one day and if you are only staffed up for 400, then that puts a lot of pressure on us,” he said.
You may think you are wise going for the lowest rate. But if your bank can’t deliver in time while the market is growing at an annual rate of 10 per cent, you may lose out on tens of thousands of dollars by having to buy property which has become more expensive.