Bank Does Not Honor Signed Offer?

JavaTheDog on 28/06/2023 - 19:47

As interest rate has been rising, I sought a broker to help me refinance to bank ANZ.

I have two properties, with a total loan amount of 1.5m.

The initial offer I received from the bank was:
* Property1, 350k loan, 4.92% interest rate, owner-occupied.
* Property2, 1.15m loan, 4.77% interest rate, investment.

I was pleased with this offer and signed it at the bank two weeks ago.

However, shortly after I signed, the bank informed my broker that the valuation of property 2 was automatically generated by their system and they decided to manually reassess it. The result was that the value should be reduced by 90k.

Therefore, after adjusting the LVR, the revised offer was:
* Property1, 420k loan, 5.22% interest rate.
* Property2, 1.08m loan, 5.82% interest rate.

I understand that the interest rate has increased again in the last few weeks, so the change from 4.92% to 5.22% for property 1 seems reasonable. But I don't understand why it jumped from 4.77% to 5.82% for property 2…

In this situation, is there any possibility of getting a better rate? Or is this the final offer and I have to accept whatever the bank gives me?

I am not sure if it is the bank not honoring the first low interest (4.77% is very low compared to the market rate) or it's just a normal legit action.

Financial

Comments

  • HardQuiz on 28/06/2023 - 19:59
    +2

    What did the broker say?

    • JavaTheDog on 28/06/2023 - 20:02

      Broker sent an email to bank about this.

      She was surprised about 4.77% rate as well and told me 5.82% is a reasonable rate at this stage…

      • tomclancy on 29/06/2023 - 00:02
        +1

        No lender has been as low as 4.77% for 3+ months, so either a) this happened 3+ months ago; or b) the broker made a mistake; or c) there was a misundertanding on your behalf.

        Property1, 420k loan, 5.22% interest rate.

        No banks have interest rates under 5.50% at the moment. Is your new offer of 5.22% current? If so then you should jump on it

  • opera72 on 28/06/2023 - 20:04
    +4

    ANZ are probably bleeding money from this deal $50 Reward for Referrer & Referee with ANZ Plus Digital Banking and had to increase your interest rate so they can keep their Million Dollar Profits.

    • hasher22 on 28/06/2023 - 20:53

      I felt so bad, that I gave declined the offer and said "you're better off with it than me, feed your family"

  • Switchblade88 on 28/06/2023 - 20:17

    Is this a 'signed and I have the enforceable contract documents' to take to ACFA, or 'signed' as in you verbally told the bank you were happy with the deal?

    Doubt you'll succeed, but you don't really have anything to lose by lodging a complaint.

    • JavaTheDog on 28/06/2023 - 20:26

      I went to branch and signed the offer with one of the staff as witness… OK thanks I will keep in mind of ACFA if it didnt work out.

      • telonacious on 28/06/2023 - 22:20

        Was it signed by them, or just signed by you?

  • freefall101 on 28/06/2023 - 20:51
    +1

    What does the contract say about changes in rates prior to settlement date?

  • djkelly69 on 28/06/2023 - 20:58
    +1

    So sounds like the offer was subject to formal valuation, and they have revised it after the valuation?

    • JavaTheDog on 28/06/2023 - 21:51

      They did a formal valuation for property 1, someone made an appointment to come in to check.

      But or property2 they just generated a valuation digitally… No one went to check the house.. Then price got changed

  • djones145 on 28/06/2023 - 20:59
    +3

    its the valuation of the second property thats hurting you. u might be borrow to close to say 80 percent lvr.
    talk to the broker, im not sure if u have free cash but if you place more money in loan 2 to reduce the lvr the rate will fall

    but talk to ur broker, all advice provided here is general advice and does not take into account your perseonal circustances. please consult your broker for further advice :)

  • JIMB0 on 28/06/2023 - 21:18
    +1

    So upon doing the full assessment they changed their offer or did you have an unconditional offer that they withdrew? I betting on the former.

    • JavaTheDog on 28/06/2023 - 21:55

      They changed offer after assessment.

      For property 1 before providing offer, bank did a full assessment with someone physically coming in the house to check the value.

      For property 2 they did not require it and provided offer… Even when they did the assessment, it was still someone digitally evaluate it. Not like property 1.

  • Malik Nasser on 28/06/2023 - 21:28
    +1

    The major banks net interest margin is around 2%.
    https://www.rba.gov.au/chart-pack/banking-indicators.html

    With the cash rate at 4.1%, an interest rate of around 6% would be normal.
    If you have a lower loan to value ratio (LVR) and a good credit rating you should be able to negotiate a better rate.

    If you could have gotten rates in the 4's that would have been awesome.
    Not sure how they offered such low rates.
    Not sure what you can really do about it.
    Good luck.

    • JavaTheDog on 28/06/2023 - 21:58

      Fair enough mate.

      I was also surprised they offered such low rates on the first offer.

      That's why I am suspecting they did all this re-evaluate and change offer thing to not honor that rate, with my limited banking knowledge…

      So asking here to see if anyone knows it is legit..

      Thanks for replying.

  • Drakesy on 28/06/2023 - 23:07

    $1 million investment property loan.

    SHEESH, how do you sleep at night

    $58k a year in interest

  • SmiTTy on 29/06/2023 - 06:38
    +1

    Maybe it's because your LVR changed? May be worth finding out if they have a different rate for lower LVR (my non big 4 lender does)

    Potentially meaning if you took out a slightly smaller loan (~90k?) then that interest rate might hopefully be improved to something similar to the ppor increase

    But also… I wonder if Maybe because they're the ones that made the mistake in the first place. Usually ppor rates are better than IP however your original offered rates seems to be the other way around. If they are both the sane type (eg both p&i) then maybe they are trying to back flip on the offer

  • cnmarine on 29/06/2023 - 10:41
    +1

    It's not binding until the bank accepts the contract as well. It usually goes - seller advertises some stuff at some price, then the buyer accepts/negotiates and puts in an offer then the seller accepts and the transaction is done.

    All those mortgage offers are very generic and generated based on all the values you tell em…they then actually have someone go through it properly once you put in an offer with supporting documents etc.

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