# Do banks actutally WANT to lend money these days?



## Staples (19 Jan 2010)

I recently applied for a top-up mortgage of €50k for the purposes of carrying out a variety of home improvements that i reckon I can get fairly good value on in the current climate. I've been paying the existing mortgage for 14 years without any problem or defualt on any occasion. I have a secure public sector job and my wife also has a reasonably high and steady income. We have a three-year car loan of €12k which has just 12 months left to go. The value of the mortgage, even with the top-up, would be less than 40% of the property's current value. We have never defaulted on or strayed from any loan arrangement either of us have ever had.  In short, we're about as low-risk as any lending institution is going to get. 

However, we can't believe the hoops the bank is putting us through to get the top-up loan. Notwithstanding our provision of all the required documenatation, we're still being asked to provide more. The reason offered is that any such requests are prompted by the (anonymous, third-party) who may want further reassurance. While I understand that a borrower's ability and willingness to pay needs to be established, the underwriters seem to operate on something of a nervous whim.

I've also been advised that any final letter of offer "is likely" to include a condition that funds will only be relased on provision of a receipt from a supplier that confirms that goods or services have been duly provide - in other words, the provider has to sweat it out until the lender has had the opprtine ity to mullover his invoice. i find this unacceptable for serveral reasons, not least the abilty to control the spending of funds that I'm obliged to repay.

The strong feeling I'm getting is that the bank just doesn't want to lend money. The money is for discretionary purchases so the effect is merely annoying rather than serious. But it occurs to me that if this is how they treat a relatively low-risk, what hope is there for anyone whose need for credit is more urgent or critical?

I'd appreciate anyone's experiences.


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## jack2009 (19 Jan 2010)

No, they dont want to lend money in general!   However, with your personal circumstances I dont see why you should be having any problems and understand your frustration.

I wonder if you would find it easier to remortgage the property and move banks?  This might also get your current provider to take care of you better.


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## Staples (19 Jan 2010)

jack2009 said:


> I wonder if you would find it easier to remortgage the property and move banks? This might also get your current provider to take care of you better.


 
It occured to me that they make actually be goading me into doing precisely that.  I have a tracker mortgage that (I'm told) may actually be losing them money at the moment.  Don't know how true this might be but it would certainly explain their attitude.


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## DonKing (19 Jan 2010)

Staples said:


> It occured to me that they make actually be goading me into doing precisely that.  I have a tracker mortgage that (I'm told) may actually be losing them money at the moment.  Don't know how true this might be but it would certainly explain their attitude.



I'd say the tracker is the problem. They don't want trackers particularly if you have a good rate.

I wonder is it possible to have two separate(relatively small) mortgages on the one property from two different lenders? probably not.(even though a few solicitors managed to do it!!)


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## Diziet (19 Jan 2010)

Staples said:


> It occured to me that they make actually be goading me into doing precisely that.  I have a tracker mortgage that (I'm told) may actually be losing them money at the moment.  Don't know how true this might be but it would certainly explain their attitude.



Whatever you do, hang on to the tracker.

It must be frustrating for you, but the bank is lending the money, therefore they make the rules. You already have a loan and that makes you a worse risk than if you didn't. So your choices are to wait till that finishes and then try again, or try another lender. There is no need to stick to one bank.

Alternatively, do you have savings? Why not use them? If you don't have savings at the moment than maybe adding more debt is not a very good idea.


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## Corcaigh abu (19 Jan 2010)

I know credit unions are lending money as i recently got a loan but it be nowhere near the 50k.  I got a rate of 6% for year 1 and 7.99% for the remainder.  Was the best i could get and i feel they really checked if i could pay it back.


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## jack2009 (19 Jan 2010)

It is true that tracker mortgages are costing the banks and that is why they did away with them.  so it would be ashame to throw the tracker mortgage away.  

Maybe you could decide what you really want/need to get done to the house and spend less than 50k and perhaps borrow from the credit union.


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## Staples (25 Jan 2010)

jack2009 said:


> Maybe you could decide what you really want/need to get done to the house and spend less than 50k and perhaps borrow from the credit union.


 
Yeah.  All of the proposed spending is discretionary anyway so maybe a forced rethink is the order of the day.  I just find it odd that Ulster Bank would treat a customer of long-standing in this way.

Thanks, everyone, for the replies.


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## Bronte (26 Jan 2010)

I was speaking to someone in the Ulster bank yesterday and was told they are open for business, that I would have no problem getting a large sum to do some building work.  I suppose there will be some hoops to go through but I'll negotiate on them probably. 

The banks are not lending apparently because nobody is asking for money because nobody is buying.  They are not prepared though to lend for large development projects.

OP I'd have a face to face chat with your loan manager to see a way around the difficulties.


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## Latrade (26 Jan 2010)

Bronte said:


> OP I'd have a face to face chat with your loan manager to see a way around the difficulties.


 
From my own experience (though not from applying for any loan) and discussions with friends and those in banking, there are more hoops that's for sure, but it seems to have sparked a return to the old days of banking where the branch manager is the guy to see/beg.

Whereas before it could be done online during a coffee break, through a broker or at the customer service desk, now it's back to dusting off the weddings/christenings suit and sitting down with the manager.

I don't think that's such a bad thing to be honest, I still remember the old branch manager and see him around (now retired). Haven't a clue who the current one is. But I know of two friends who went for mortgages (yup they bought houses!) through a broker and were refused by the banks, but sat down with their local manager and got the mortgage (for the same amount previously refused).

Mind, haven't some of these controls always been in place? When I got my car loan only 5 years ago, I had to prove I'd bought a car, and I know the in-laws had to show quotations several years ago when they had a loft conversion done.


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## Shawady (26 Jan 2010)

Staples,
Could I ask what bank you are with?
I am on a good tracker with NIB and will be hoping to borrow money to do up the house and was wondering if they would try make it difficult for us to try get us off the tracker and re-mortgage.


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## Staples (26 Jan 2010)

Latrade said:


> I don't think that's such a bad thing to be honest, I still remember the old branch manager and see him around (now retired). Haven't a clue who the current one is. But I know of two friends who went for mortgages (yup they bought houses!) through a broker and were refused by the banks, but sat down with their local manager and got the mortgage (for the same amount previously refused).
> 
> Mind, haven't some of these controls always been in place? When I got my car loan only 5 years ago, I had to prove I'd bought a car, and I know the in-laws had to show quotations several years ago when they had a loft conversion done.


 
The line I'm getting from the branch is that ".... these pesky underwriters are insisting, blah, blah blah,.....nothing to do with me...., blah blah blah...No, unfortunately you can't speak directly to the underwriters...etc, etc.....they'll set the conditions for the loan ....."

What's been made clear is that responsibility for decision-making in Ulster Bank (at least in relation to mortgage aplications) does NOT reside with the branch manager.


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## Mpsox (26 Jan 2010)

Staples said:


> What's been made clear is that responsibility for decision-making in Ulster Bank (at least in relation to mortgage aplications) does NOT reside with the branch manager.


 
Branch managers in UB in recent years have been downgraded to being little more then team leaders in a suit. They have no power, everything is centralised and a lot of the decision making is done by computer, you either pass the criteria or you don't. 

Bear in mind as well that 20% of UB staff have left in the last 6 months under a VR scheme, and most of those who left were very very experienced staff. Hence if there are any issues with your application, the knowledge within the bank of how to deal with it, may have gone as well

From talking to some people in the UK that I know who work for RBS (UB's owners), they've said that there is now a very different attitude to risk in the bank and they are being much more cautious. No harm in many respects given the mess they've made. Remember, ultimately, you are looking to borrow from the British Govt, not Ulster Bank. !!


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## NorfBank (26 Jan 2010)

Branch managers do not make any decisions on lending, mortgage enquiries are referred to the central underwriting hub for approval.

The banks are not lending as much as they can because the margin on residential lending is not high enough. Banks variable rates are around 3% at the moment yet they can invest their money in government bonds for around 4%. Commercially what would you do?

Until variable rates increase (just around the corner) then the banks will have little desire for mortgage lending. This is not the case for first time buyers as due to the bail out, BOI and AIB got €1bn each that they must lend to FTBs.


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## Staples (26 Jan 2010)

NorfBank said:


> The banks are not lending as much as they can because the margin on residential lending is not high enough. Banks variable rates are around 3% at the moment yet they can invest their money in government bonds for around 4%. Commercially what would you do?


 
What would I do? They're retail banks for God's sake! It's their core business. Have they learned nothing from the last few years in terms of the value of protecting their longer term viability and reputation for the sake of short-term opportunism. Do they feel any responsibility or obligation to meet their core customers' needs? For my part, I'm closing my UB accounts and will source future funding elsewhere (I'm not daft enough though to give up my tracker mortgage).



NorfBank said:


> Until variable rates increase (just around the corner) then the banks will have little desire for mortgage lending.


 
Then why can't they just say so without leading customers on like fools? Perhaps it's because they haven't the guts to say so straight out and that they'd rather the application died of exhaustion before a decision was actually required. What a bunch of spineless, mealy-mouthed muppets.


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