Finance Ireland raise interest rates from 1.5-2% (Oct 2022)

Brendan Burgess said:

@Mark Coan

Hi Mark

In the old days, I thought it was very clear. The fixed rate was determined on the day you drew down the mortgage. Not the rate in the letter of offer.

And people benefited from this when rates fell although they lost out when rates rose.

So I am not sure that it's worthy of a complaint to the Ombudsman?

If a lender such as Avant or AIB said that they would turn around letters of offer within 7 days of getting all the information and that the rate would be guaranteed for 30 days or 60 days, it would be a great marketing advantage for them.

Maybe some of them have this already in the letter?

Brendan

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Hi Brendan,
That would be a welcome development, I don't believe anyone currently offers this.

The gap between final offer and drawdown is usually around 30 days due to the solicitor having to work through the transfer of deeds etc. In the case of switchers the lenders are currently being very slow to release the deeds to the solicitor driving delays.

In the case of Finance Ireland the key issue I believe is that despite these delays to customers, the deadline for a customers solicitor to request the cheque was set as the Friday before they announced the change. So customers had no chance to comply with it.

They are legally entitled to do this, but a grace period would have been the decent thing to do and doing it this way, caused undue distress and won't help their brand any in my view.

Mark

Mark Coan said:

They are legally entitled to do this, but a grace period would have been the decent thing to do and doing it this way, caused undue distress and won't help their brand any in my view.

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It will also put some people off the idea of switching – to any lender. The story in the Indo was seen by many people.

PebbleBeach2020 said:

You should always apply to multiple lenders simultaneously. You have the documents ready so it costs nothing to submit the paperwork to and see who has the best rates available when you actually want to draw down.

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You can get Approval in Principle and probably complete a few further steps (with multiple lenders) before you have to involve a solicitor.

But then you will have to pick one of the lenders and direct your solicitor to try to secure a full loan offer from that lender (I think).

Could you ask your solicitor if they are happy to try to get a full loan offer from multiple lenders at the same time? Would they want a higher fee for that?

One other important point to check is whether the broker (if you use one) has the right to charge you a fee if you pull out of a mortgage application half way through.

The problem is that every single mortgage has to be profitable at origination. There are no economies of scale and you can't make it up on repeat business.

For sure normal day to day market movements will mean margins will get smaller or bigger between offer letter and drawdown, but at the moment funding costs are going up to the point where there is no margin at all. No lender will grant a loan at this scale if its funding costs make it unprofitable.

Mark Coan said:

They are legally entitled to do this, but a grace period would have been the decent thing to do and doing it this way, caused undue distress and won't help their brand any in my view.

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I agree with all that.

But I don't think it's the basis for a complaint to the Ombudsman.

Brendan

From an Irish Times article on Thursday:

In a statement, Finance Ireland said, following Monday’s announcement, it discussed the matter with its brokers, negotiating a one-week extension with its funding partners to the initial deadline by which it can fund new drawdowns at existing rates.

A spokesman said: “We have briefed brokers on this development, which means that mortgages drawn down before close of business on Friday, October 14th, can avail of the old rates. Mortgages drawn down after that date will be at the new rates[...]"

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But from an Irish Independent article on the same day:

It said that following discussions with brokers, it is now giving people a one-week extension to draw down funds at existing the lower rates.

But their solicitors still has to have submitted a request for funds by last Friday [30th October].

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So it seems that the extension is no use to people like @BeccaF10! and @paulex.

Not sure if this is the same or a further extension?

It confirmed to brokers that it will apply a one-month notice period during which applicants with loan offers for a mortgage may draw down their loans at the lower rates.

The move will apply to customers who were in receipt of a formal loan offer on or before September 30 September and who draw down their loan by Friday October 28.

Brendan Burgess said:

Not sure if this is the same or a further extension?

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It seems like a proper extension! This is the crucial section:

Finance Ireland had said that only mortgages applications which have been approved and where a request to draw down had been received before the close of business on Friday, September 30, would avail of the lower rates.

If no request for a funds draw down was put in before that date the new higher rates would apply.

Finance Ireland has now climbed down.

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The move will apply to customers who were in receipt of a formal loan offer on or before September 30 September and who draw down their loan by Friday October 28.

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So it should be good news for @paulex @BeccaF10! @Colm G and probably a few others here.

Hopefully!!! I emailed the broker this evening so hopefully will hear back early tomorrow! Will let you know!

Paul F said:

It seems like a proper extension! This is the crucial section:



So it should be good news for @paulex @BeccaF10! @Colm G and probably a few others here.

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Yes this is good news, in fairness to Finance Ireland they have listened to our feedback as an industry and changed course. This will help build confidence back in both them as a lender and lenders as a whole.

Good news for @paulex @BeccaF10! @Colm G, but also I'd suspect for others in future as this will set a precedent for future rates.

The new rules are below, crucially the requirement for the solicitor to have issued the cheque by Friday the 30th to qualify for the better rates has now been removed and replaced with a requirement for the formal loan offer to have been issued.

For customers to close on the lower rates:

• The case must have been at formal loan offer stage as of COB Friday 30th September 2022.
• The case must close by COB Friday 28th October 2022.
• Last date for receipt of documents/condition fulfilment, including all elements of the legal pack, is COB Friday 21st October.

Cases that have already been re-offered on revised rates
If your case was at loan offer at COB Friday 30th September, and has since been reoffered at increased rates, the following will apply:

• Where the solicitor is still in receipt of the original loan offer, we will honour same.
• Where the original loan offer is not available, please contact your broker to arrange an immediate reissue on previous rates

Brendan Burgess said:

If a lender such as Avant or AIB said that they would turn around letters of offer within 7 days of getting all the information and that the rate would be guaranteed for 30 days or 60 days, it would be a great marketing advantage for them.

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On a somewhat related note, last month user keensaver posted:

keensaver said:

Haven told me on the phone that they would give 1 month's notice before any rate increases. Of course, that's not in writing, and also no guarantee that they would process the break and refix in the month this time around.

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It will be interesting to see if Haven stick to that.