Can 80% save money through switching

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Bronte

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I think the apparent 80% of you who can switch, including some in your own banks should make this your number one priority new year resolution. It really is a no brainer. In addition, if lots of people do it, it will help drive down rates because it puts pressure on banks to up their game.

And yes, I've switched twice. I've also locked in rates so many times I can't remember. I'm ready for Brexit, Trump and Euro problems that might make interest rates rise. .
 
Bronte said:
I think the apparent 80% of you who can switch,
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Bronte said:
In addition, if lots of people do it, it will help drive down rates because it puts pressure on banks to up their game.
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Firstly I don't believe for a moment that 80% can switch products either within their current bank or to a different financial institution. I would really like to know where the Central Bank got this number from?

I believe this would drive rates down for new business, but I do believe this would see the KBC policy of differentiation between new and existing customers become more of a norm. Existing customers would end up subsidising new customer rates, and only those who are in a position to switch very frequently would benefit from it.

Sadly I believe very few people would be able to constantly do this - between people changing jobs, having children (childcare expenses) etc - people would effectively become a slave to their mortgage for years.

I read somewhere that in the UK a customer who switches their utility every year can save around 200 pounds. However, if every customer was to do it the saving would be less than 70 pounds. The difference is not everyone can always switch their mortgage
 
gnf_ireland said:
Firstly I don't believe for a moment that 80% can switch products either within their current bank or to a different financial institution. I would really like to know where the Central Bank got this number from?
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I assume it's based on their own analysis - they are certainly in a position to know.

I too would love to see their analysis but I certainly think it's almost certainly true that the vast majority of, non-tracker, variable rate customers could make savings by switching to alternative products.
 
gnf_ireland said:
Surely there should be no-one with AIB overpaying :)
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AIB don't allow existing borrowers to move LTV brackets so there's plenty of AIB customers that could make savings by switching to alternative products offered by other lenders. Ditto EBS.

Ulster does allow existing borrowers to move LTV brackets but I would guess that most borrowers don't bother to exercise this option. In any event, many of KBC's fixed rate offerings are lower than anything that Ulster currently offer - so again most non-tracker variable borrowers could make savings by switching to alternative products.

It's important to be clear about what the Central Bank actually said - that as many as 80% of non-tracker variable rate borrowers could make savings by switching to alternative products.
 
Sarenco said:
It's important to be clear about what the Central Bank actually said - that as many as 80% of non-tracker variable rate borrowers could make savings by switching to alternative products.
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So another way of saying this is 80% are not on the cheapest product on the market, taking no account of personal circumstance and a customers ability to switch.

To be honest I do find the Central Banks 'mantra' that switching is the answer to all problems to be a bit insulting to all those customers who cannot switch. I am sure there are very few customers out there who want to pay ~5% if they could switch and pay 3%. I am sure all those paying the upper range of the variable rates are 'trapped' in some way. If its inertia only, then my sympathy for them is ill-founded.

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I would like to see the Central Bank put solid proposals on how they plan to solve the root causes of the issues at hand, rather than just repeat (a) customers should switch and (b) Ireland is a higher credit risk scenario.
 
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I am not defending the Central Bank or even trying to interpret what they might have meant - I simply repeated what they actually said without any editorial.

I have repeatedly argued on here for the introduction of a statutory cap on mortgage rates that is set by reference to the average rate charged on all outstanding mortgages in the previous quarter (to the point that I'm sure is boring people to death). Instead, an ineffective, unconstitutional and anti-competitive Bill is currently before the Oireachtas to give price-fixing powers to the Central Bank.

I really don't understand your comments about banks doing a "solo run" and "levelling the playing field" - are you arguing that the State should set the terms of all credit arrangements? Are you opposed to commercial entities differentiating their products? What "benchmark" are you talking about?
 
Sarenco said:
t's important to be clear about what the Central Bank actually said - that as many as 80% of non-tracker variable rate borrowers could make savings by switching to alternative products.
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That is not what Sibley said.

He said:
“… as I said overall, in terms of SVR borrowers, we think it’s probably more than 80% of them can save money by switching ….”

This is a guesstimate.

The Joint Committee on Finance, Public Expenditure & Reform and the general public deserve accurate information rather than probabilities.
 
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I simply quoted what the Irish Times reported was said at the committee hearing.

In any event, I don't see any radical difference between "as many as 80%" and "probably more than 80%". Do you?

Does it really matter if the accurate figure is 70%, 80% or 90% of non-tracker variable rate borrowers that could make savings by switching to alternative products? Surely the important point is that the vast majority of such borrowers could make savings by switching to alternative products but are failing, for whatever reason, to do so.

I would certainly like to see the Central Bank's data/analysis but I'm happy to accept the broader point that a large majority of such borrowers could make savings by switching. Aren't you?

What is more interesting to me is understanding why this is the case.

Is it simply down to consumer inertia; a lack of knowledge or understanding of the savings that can be made by switching; a fear of a better deal subsequently coming on stream; a residual fear of being duped or tricked by the relevant financial institution or something else entirely?
 
Sarenco said:
It's important to be clear about what the Central Bank actually said - that as many as 80% of non-tracker variable rate borrowers could make savings by switching to alternative products.
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I don't get your point here. Why are you underlining could? The CB said 80% can save by switching. Is this true or not is the quesiton. Is the CB correct or incorect.

I've seen nothing to show that 80% can save. Surely the CB have something they are basing such statements on. Like examples, figures etc.

You would also wonder why the CV has not figured out why as many of 80% have not switched. It's clearly a no brianer to switch. We have a poster on here who did so easily. Twice. So either it's not true about the 80% or 80% of people are clueless about the savings that can be made.
 
Bronte said:
I don't get your point here. Why are you underlining could?
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Because I was responding to GNF's earlier post that talked about whether or not certain variable rate borrowers (i.e. those with AIB or UB) should switch providers. Obviously the Central Bank is not privy to the individual circumstances of individual borrowers.

Again, I would also love to see the Central Bank's data/analysis. However, the Central Bank certainly should be in a position to make a good estimate given the huge amount of data that is reported to them by the banks.

I would also be very interested to know why the numbers switching to alternative, cheaper products is so low and have suggested a number of possible explanations above.
 
Sarenco said:
What is more interesting to me is understanding why this is the case.

Is it simply down to consumer inertia; a lack of knowledge or understanding of the savings that can be made by switching; a fear of a better deal subsequently coming on stream; a residual fear of being duped or tricked by the relevant financial institution or something else entirely?
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Bronte said:
You would also wonder why the CB has not figured out why as many of 80% have not switched.
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I agree with both of you here. I think it would be much more beneficial for the Central Bank to find out why people are not switching, rather than spout out numbers around those who could but don't.

If they truly believe that competition and switching is the answer, why not invest some resource into working out what the real or perceived blockers are to people switching and address them properly.

Until they do this, they are just making statements without backing them up or doing anything to address them. This to me is the main failing of the Central Bank in this area - not addressing the root causes of their recommended solution to the problem
 
Sarenco said:
Again, I would also love to see the Central Bank's data/analysis. However, the Central Bank certainly should be in a position to make a good estimate given the huge amount of data that is reported to them by the banks.
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Maybe they should provide some breakdown of how this 80% could save money, rather than making a statement without any supporting evidence.
 
Sarenco said:
Apparently the Central Bank are researching the whole area of mortgage switching and hope to complete this exercise early next year.
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Let's see what is produced out of it. I wonder will it address the root causes of why people are not switching?
 
Well apparently "“qualitative and quantitative research with consumers and industry” is being carried out as part of this research so hopefully it will consider that very issue. I think it's a worthwhile exercise and I hope the results are published.
 
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