THYME FINANCIAL GROUP PTY LTD
ABN: 56 605 467 301
0409 157 873 (Cheyne)
0424 757 143 (Nick)
cheyne@thymefinancial.com.au
nick@thymefinancial.com.au
11 January 2016
Neither a Borrower nor a Lender Be
By Cheyne Ghoughassian (with apologies to Shakespeare)
This week’s rates are published at the end of this article.
To quote Polonius more completely than the title suggests:
Neither a borrower nor a lender be
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
Hamlet Act 1, Scene 3
When Hamlet was first performed in London (probably between 1598 and 1600) the landed gentry were
borrowing (from friends) and spending like drunken sailors to maintain their ostentatious lifestyles. So
much so that domestic thrift (“husbandry”) had become a thing of the past and the estates of said gentry
were being sold off piece by piece to affect repayment of their debts.
The first line is sometimes quoted by lenders but it takes old William out of context without the entire
quote. Arguably, it is one of the most misused quotes of Shakespeare’s plays (possibly just after “to be or
not to be…” and “…my kingdom for a horse”).
Shakespeare is referring to the borrowing from friends and how it can lead to the loss of both the debt and
the underlying friendship.
Who now would consider where they borrow from a friend? If you don’t you probably should but with the
caveat that you should choose your friends wisely.
Bank’s – when they’re operating as they should – provide an invaluable source of cheap debt into the
economy. This enables businesses and homeowners to acquire assets with minimal equity. In the case of
homeowners, they can acquire a home with (in some cases) only 5% of the purchase price and pay the rest
off over time.
With businesses, they can borrow around two times their annual EBIT (Earnings Before Interest and Tax).
Over time, banks may become a little more flexible and allow the business borrower a higher multiple.
I was at a wedding reception between Christmas and New Year and – prior to entering inside - was engaged
in conversation with a gentleman who managed a successful enterprise (vagueness is required to protect
the identity of the gentleman). He maintained that he had a terrific relationship with his banker and freely
shared the terms and conditions of his borrowing. His pricing was unheard of. It was a much lower than I
could hope to get for him.
After picking up my jaw from the floor, I politely suggested to him that I could not match his rates and that
he should continue to use his current banker.
When he asked for my card, I knew that I had passed the first test.
THYME FINANCIAL GROUP PTY LTD
ABN: 56 605 467 301
0409 157 873 (Cheyne)
0424 757 143 (Nick)
cheyne@thymefinancial.com.au
nick@thymefinancial.com.au
Once inside, another gentlemen approached me and also asked for my card. He explained that his bank had
re-structured about a year earlier and that his relationship manager had been forced to take on many more
clients and he felt – after almost 40 years – it was time to change.
When banks cut costs by forcing relationship managers to double or triple the size of their client base,
something has to give. It usually manifests itself in the form of lost revenue over time. The poor RM cops it
in his/her year-end review and the loss of the client is put down to an underperformance by the RM – not a
result of management cost cutting. The banks feel they can do this as, once you sign loan documents, they
have your custom. They push the friendship to its limits.
It’s fair to say not all lenders behave in this way.
Let’s face it, if banks were still good at relationship management, there would be no need for our services.
Where they excel is systems. Never have I seen our local banks so immovable on anything that is not a ticka-box transaction.
If Shakespeare were around now he may suggest that a lender should allow a borrower to be.
What you should do is stop living in the past and forgo any relationship pretence with your bank. They’ve
already moved on. They want you to deal with an intermediary (such as a broker). Why? Because they
don’t pay us a salary or rental for the CBD space that we may occupy, they don’t provide us computers,
insurance, superannuation etc. They just pay us for the business that we bring in.
So say hello to your new little friend (with apologies to Tony Montana).
RATE MOVEMENTS
This Week’s Activity: No movements this week. This has been the pattern for most of the summer. Expect
to see some changes in the coming weeks.
Whilst we’re accredited with around 18 lenders across many loan products, we are not accredited with all
lenders and there are only a couple of lenders that we do not deal with.
This week’s best rates* from a variety of lenders is as follows:
Variable
5 years
Owner Occupied
Investment
Commercial
3.98%
4.30%
4.57%
4.59%
Fixed Rates
3 years
2 years
4.09%
4.24%
3.99%
4.16%
Varies depending on many factors - call to discuss your
circumstances
1 year
4.15%
4.36%
THYME FINANCIAL GROUP PTY LTD
ABN: 56 605 467 301
0409 157 873 (Cheyne)
0424 757 143 (Nick)
cheyne@thymefinancial.com.au
nick@thymefinancial.com.au
Thyme Financial Group
T: 0424 757 143 (Nick)
E: nick@thymefinancial.com.au
0409 157 873 (Cheyne)
cheyne@thymefinancial.com.au
Disclaimer: These rates may change without notice. Thyme Financial Group Pty Ltd does not set these rates. This article is meant
to inform our clients about the movement in rates. Thyme Financial Group is not responsible for any changes in these rates with
or without our knowledge.