Some lender should offer tracker customers of other banks a trade-up product

Brendan Burgess said:

There is nothing at all "normal" about a lender giving out money at ECB +0.5%.
There is nothing at all "normal" about a bank allowing someone who has a mortgage at ECB +0.5% to transfer it to another lender.

I have a mortgage with AIB. They give me free current account with it. So does that mean that you, as a customer of BoI, is being penalised for not having free banking?

You have a cheap tracker with BoSI - interest only for 30 years. So am I being penalised because AIB won't match it?

I think that Ulster was the first to bring out the tracker mover product. Does that mean that customers of AIB and BoI were being penalised because they had no such product?

AIB now gives the tracker mover for the life of the product. Does that mean that Ulster is penalising their customers because they do it for just 5 years?

If you have a cheap tracker with Danske and can't move it to another lender. You have not been penalised. In fact, you have saved thousands of euro.

Brendan

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Hello Mr. Burgess,

Not quite right I'm afraid.

I have a mortgage with AIB. They give me free current account with it. So does that mean that you, as a customer of BoI, is being penalised for not having free banking?

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No, as I have the option to move, or stay - either way, I can have a current account. In my circumstance, I don't have the option to stay with my lender, and get a top up loan (on current lending rates obviously)

You have a cheap tracker with BoSI - interest only for 30 years. So am I being penalised because AIB won't match it?

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No, as I elected to take out my homeloan on a Tracker basis, I may have gone for an AIB SVR, just as you may have gone for a Tracker with BOSI / Danske etc. We both had choices at the time. Competition in the market today is not what it was in times past, there's different rules applying to capital reserves, Banks Balance Sheets are different now to then etc. so that impacts on the lending margin that banks are applying as we both know.

I think that Ulster was the first to bring out the tracker mover product. Does that mean that customers of AIB and BoI were being penalised because they had no such product?

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No, they had a choice to move to Ulster Bank in that example, but elected to stay with AIB or BoI. Their choice ... in my instance, I don't get the choice I am compelled to move, and incur a significant financial penalty.

AIB now gives the tracker mover for the life of the product. Does that mean that Ulster is penalising their customers because they do it for just 5 years?

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Some might say yes, but I say no. In either instance, the key point is that both AIB & Ulster Bank customers can have a top up loan without moving lender, and don't lose their Tracker immediately.

If you have a cheap tracker with Danske and can't move it to another lender. You have not been penalised. In fact, you have saved thousands of euro.

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Incorrect.

I made a commercial decision and it's worked in my favour. The benefit of a good decision should not be removed from me, because I want to take out a new additional loan on current market terms.




If I need a top up loan on my property, then I am compelled to lose my Tracker immediately because of the actions of the former lending bank, and the consent of the Regulator. If someone has a Tracker with a bank still operating in the country, they don't lose their Tracker the day they draw down their new Top up loan. They can chose to stay with their existing lender. I don't have that choice. Therefore I'm disadvantaged through no fault of my own.

There's a key difference between those who can obtain a top up loan with their existing lender, and those who cannot. Those who cannot are the ones being penalised as I describe earlier.

Lenders are under no obligation to give top up loans.

Lenders are under no obligation to allow borrowers move their trackers.

If AIB makes a commercial decision tomorrow that they will no longer allow their tracker customers retain their trackers if they move home, will you say that AIB customers are being "penalised"?

Brendan

Brendan Burgess said:

Lenders are under no obligation to give top up loans.

Lenders are under no obligation to allow borrowers move their trackers.

If AIB makes a commercial decision tomorrow that they will no longer allow their tracker customers retain their trackers if they move home, will you say that AIB customers are being "penalised"?

Brendan

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Hello Mr Burgess,

If AIB make a commercial decision tomorrow on not permitting people to retain their trackers if they move home, that will be different to the issue I'm calling out, which is nothing to do with moving house.

If AIB or another one of the current Banks is requested to provide a top up loan secured on the home owners property, the Borrower meets their lending criteria for this second (new) loan secured on the residence, and then says "oh, by the way, you have to lose your Tracker rate immediately on your existing loan, to get your new (second, top up) loan", then that's treating the customer unfairly. It's charging the customer significantly more, for taking out the new second top up loan. I think it's for this very reason, that there's some sort of arrangement made for existing Tracker customers across the existing banks, who seek to obtain a second top up loan etc.

Lenders are in the the business of lending once the criteria for lending is met. We are comparing apples and oranges here, when we talk about licensed Banks who are existing lenders, and other third parties that are not lenders. Ironically, this is the route of the problem that I've called out above.

OK, so the thread title referred to trade ups but I see that you are referring to something different.

Forget the tracker for the moment.

If you have a non-tracker mortgage with KBC and they decide to withdraw from the Irish market and stop doing top-up loans, do you think that the Central Bank should intervene and force them to do so?

If they sell that fully performing loan to Vulture Fund Limited, do you think that the Vulture Fund should be forced to give a credit worthy borrower a top-up loan?

Some banks used to give top-up loans without asking what they were for. So you could buy a car or a holiday or invest in a business. Now they will give top-up loans only for home improvements as far as I know. Should the Central Bank intervene and tell banks to give out money without asking the reason as long as the borrower meets their lending criteria?

Brendan

Hello Mr. Burgess,

Firstly, it's a fair comment about the title of this thread possibly causing a bit of confusion here - I'm glad you've spotted it.

Secondly, in response to your questions:

Re: KBC example, I think the Central Bank should put provision in place to ensure that the customer is treated fairly, if they have to move their loan (post KBC Ireland exit), in order to get a banking service that they would otherwise get from KBC, if it were still trading in Ireland

Re: Purpose of the loan - I'd be far more concerned with repayment ability myself, then the LTV, but thereafter the purpose is worth considering. I would not support lending for something like going on a two week's gambling trip to Vegas, but I would support someone being able to avail of a top up loan for something like paying their kids university fees etc.