Mortgage Holding Account

[Pablo]

From what I have gathered, whenever I transfer money from my bank account into my mortgage account, Bank of Ireland holds the funds for two or three days in what they call their "mortgage holding account". I had noticed it in the past (where my monthly repayments would not show up in the mortgage until a few days later), and also recently when I did a lump sum payment (and again took three days to show up in the mortgage account). It is when I inquired the bank when they told me about this "holding account".

I assume that, if they do this for all mortgage accounts, the bank can maintain a pretty large balance (many millions) in this holding account. And they can use this balance to make further profits.

I would not be surprised if this is a widespread practice. But - is this actually legal? Can the bank artificially hold on to these funds in order to make extra profit? Note that they do that at the customer's expense (i.e., I'm paying interest during those additional days).

Apologies if I've completely misinterpreted what is happening here - maybe somebody can clarify it for me.

Thanks.

 

[joeysully]

I think they do this even for normal transfers from one account to another. Say you transfer money from BOI to AIB. it will probably take 3 days, even more if its the weekend. In this age of technology surely its possible to do almost instant transfers between banks anywhere in the world. The computers don't turn off a night or the weekend but the money still takes days to transfer. In the UK there are systems in use that will allow bank transfers between banks in a couple of hours. Its all down to the 1970's system they are using here....

 

[rob oyle]

Since SEPA, my experience has been that all the transfers I have made have completed in the same day (where the transfer was in the morning) or by the next day (when the transfer was made in the afternoon). I don't think we're much worse in that regard than elsewhere in Europe, although in the UK the transfers seem to be the same day regardless of the time of the transfer (from my experience).

 

[astjan]

Since SEPA, my experience has been that all the transfers I have made have completed in the same day (where the transfer was in the morning) or by the next day (when the transfer was made in the afternoon). I don't think we're much worse in that regard than elsewhere in Europe...

My experience is the same. Even transfers to Poland take max 1 day (before SEPA it was at least 3 days).


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[Pablo]

Yep, that's what I mean. The mortgage payments go from BOI to BOI. Even if they were different entities, three days would be too much. And, as I mentioned, the delay is not caused by the transfer itself - it is caused by the fact that the money is first placed into a global "mortgage holding account" for a couple of days, then transferred to my account. At least that's how it was described to me by bank staff.

This is what concerns me - the bank is unnecessarily placing my money into an internal account for two or three days, causing a loss for me (interest I'm paying on mortgage / interest would be making on the cash) while making a gain themselves (interest on my cash).

 

[TarfHead]

This sounds odd. I have a BOI mortgage, repaid by DD from my BOI current account. I have sight of both accounts on Banking 365.

When my mortgage DD is paid on, say, a Monday, my mortgage balance on Tuesday, on Banking 365, shows the balance as having been reduced by the amount of the payment.

I have never noticed a delay of more than one day, i.e. next day.

 

[Pablo]

Thanks. For me it's usually two days for DD and it was three days for the lump sum transfer. I never had any concerns with the DD delay (I assumed it was just a delay with the Banking 365 website synchronizing data) but the "holding account" explanation I was given by the bank staff for the delay in the lump sum hitting the mortgage account was unexpected. I don't like it when wired money goes into "limbo" for more than a day or two.