Rate Tarts - New Terminology We Should All Be Using

Home “rate tarts” is a term that has been coined by the UK for consumers who constantly look for and chase after better deals from lenders in order to limit the pinch of rising interest.

It is now thought that South African home owners may have to revert to being ‘rate tarts’. According to various industry experts, the increasing interest rates are beginning to send SA buyers to develop a culture of bargaining, bartering and chasing after better deals and as there are definite indicators of the property market having dissipated slightly, the lenders may be more willing to bargain.

The shrinking margins and lowering of bustle in the South African property sector may lead banks to advertising their lending rates and competing on prices, something that has not been done by in the past. Another development occurring in the banks is the emergence of a ‘cancellation or defend rate’. The cancellation or defend rate occurs when a banks client threatens to move to another lender and cancel their existing mortgage at their current bank.

The cancelling (defend) department of their current bank is prompted to offer a further rate concession to the enraged client in order to avert them from moving to another bank. Consumers should use this to their advantage by talking to lenders about moving their mortgage thereby allowing for the greatest leverage.

It should be remembered that it costs approximately 1% of the value of the loan to move to another lender. This 1% can be covered by the equity that is accessible in the new home loan and can possibly be recovered in approximately 18 months after the change has been made. This term is otherwise known as Loan Switching!

If switching is something that interests you, give us call at Wizard Home Loans today and chat to one of our specialised consultants. Click here to chat to Wizard Home Loans.