Are there any benefits to Bank Loyalty?
4 min read
Clients often ask “Will my bank give me a better deal? I’ve been with them for 20 years and I always pay everything on time.”
Bank Loyalty, is it a one way street?
If the banks acknowledged bank loyalty and gave their existing clients the same rates as new business, refinancing might might happen less or might even become unnecessary!
My clients are constantly asking if is there is any benefit in sticking with their current bank. It is often assumed that years of loyalty to the one institution or an excellent financial history will transfer into some kind of value, be it discounts or better rates. Wouldn’t it be nice?! Banks respond to profit, so unfortunately even if you’ve been with them for 20 years or have millions of dollars of business with them, a new client borrowing $300,000.00 may get a better deal than you.
So why should you be loyal to your bank?
You shouldn’t, necessarily. When it comes to getting you the very best rate, we as your Mortgage Broker will not take comfort in familiarity or bank loyalty into consideration. In fact, sticking with your current bank could very well have the opposite effect. The current lending war is actually working in the favour of those switching banks. Most of the time existing clients are paying higher rates than those offered to newcomers, simply because offering better rates attracts new business.
Banks are reactive. They will offer new clients the best possible rates in order to acquire their business, and they will suddenly bend over backwards to keep existing clients that threatened to leave. What they won’t do is take the initiative to offer you a better rate, and why would they? That would eat directly into their profit margin, and if it ain’t broke…
That’s where Entourage Finance comes in. Our job as your mortgage broker is to ensure that you as our client are consistently getting the best rates possible, regardless of what the big banks are offering. Some critics may look down on refinancing by Mortgage Brokers, as its happens more and more in the current environment. However, when lenders are offering borrowers $1,500.00 cash back to refinance, we would be doing our clients a disservice if we didn’t tell them about it. It’s true, we get commission on taking business to a new lender, but it is only feasible because of the bank’s unwavering insistence to offer better rates for new business. It means commission for us, but if I said to you, you can stay with your existing bank or I can take you to a new bank that saves you $3,000 in the first year and over $1,500 each year after, what would you do?
If you (like many) are now questioning if your bank has your best interests at heart we suggest getting in contact with us to find out just how much your current bank cares about you.