If I'm Johnny BOI, I could cut rates for <60% borrowers, but AIB will follow suit if/when they see their business bleeding. We're back to square one in terms of market share, but now the market is that much less profitable.
I suppose the reason LTV is used is that it is the best predictor of losses. Someone with a high Loan to Income but a low Loan to Value may well default, but the lender won't lose anything as the loan is well secured.
Risk-based pricing/credit scoring is much more sophisticated in the US.
Not that it did them any good if you remember 2008
The credit market is different to the flights market in some significant ways:That's the way competition works in any market.
Cui bono?
Customers.
Look at the airline business. What would have happened if Michael O'Leary had simply matched Aer Lingus prices on short-haul flights? Not much. Ryan Air wouldn't have become the biggest low-cost airline in Europe and we would still be paying through the nose to fly to London.
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