Be careful with re-fixing your Fixed Rate Mortgages

Oddly enough – the New Zealand banks are trying to take a chunk of your cash for the privilege of paying more interest. Gits.

Fixed rates in New Zealand are currently way too high. Floating rates are at about 5.75% with fixed rates running at about 6% for 6 months upto a whopping 8.5% for 5 years.

Usually although in theory you would need to pay a fee for re-fixing a mortgage, but this is waived. Now it seems the banks are being a lot less keen on waiving that fee.

An ASB Bank document obtained by the Herald on Sunday said it introduced the new fee schedule to “reflect the time and complexity in providing the best in customer service”.

The fees would now apply from a series of dates between March and May.

While the document shows that the cost of the fees is reducing in some cases – from $250 to $50 – brokers say the customers will have a tougher time getting fees waived.

This is something we have had with ASB for about 2 years now. They wont waive bank charges, though they are still not charging us for new loans as we re-structure our lending. But to be honest – the cost of banking with them is going up, and the service is going down. I am certainly not getting “the best in customer service”. In fact – I’m getting lousy service – I just have to pay for it now.

So you do need to be careful. And you do need to shop around. Loyalty to a bank is frankly silly – they just do not deserve it – so if you are coming up to renewal time on your mortgages – shop around and go with whoever sweetens your life the best. Bear in mind that here in New Zealand one mortgages can splint up into several parts. That can add up if you get charged the full $250 to re-fix each part of a loan.

The only customers not having to pay fees for refixing a mortgage were those referred to as a “high value clients”.

The bank said in the document that fees were required by law to be “fair” and represent the cost of handling a loan. It said the fees were changing to “fairly reflect the time and resources we allocate to client interactions”.

The document also showed the ASB Bank was wiping a $500 contribution previously given to customers to help pay for legal fees.

Well, I’m certainly a “High Value Client” at ASB, but they still don’t give a damn. I have however managed to get them to reimburse us some legal fees that we have incurred because their loans department keeps stuffing up. So much for paying for service huh?

So be careful. Shop around, and make sure that paying off your mortgage is a high priority. That’s the one thing that will give you leeway to make your own choices and switch banks. Although the recession is basically over – the fallout from it could last years. The place we see that most is in the cost of mortgages and the unwillingness of banks to lend money to people who need it. Having small mortgages means the banks love you because you are a low risk to them. That’s a good position to be in!

Thanks to Christine for the heads-up!