Lenders must offer existing customers any deal on offer to new customers.
We don't prevent any other commercial enterprise from offering incentives to attract new customers so why should mortgage providers be treated as a special case?
There has to be legislative control.
As a result of pressure from the Fair Mortgage Rates Campaign, they have now agreed to let existing customers apply for the rates now available to new customers. But this application obliges them to agree that they will not be entitled to any future cuts.
We don't prevent any other commercial enterprise from offering incentives to attract new customers so why should mortgage providers be treated as a special case?
To be fair, most people really struggle with the number of plans available and struggle to find a suitable one for them. I spent a number of weeks last year reviewing them and it was hard work indeed.Well, I don't agree that product differentiation in the health insurance market has been bad for customers.
That is fine - but then we would have none of the current banks available as they were all insolvent. We would not have to deal with the issue of previous losses (as they would have been sold off at a huge discount), as would tracker mortgages. The banks would be starting from a clean baseline again and the historical issues would be irrelevant. How often have we heard that the rates need to be high as the banks need to return to financial stability.In my humble opinion, the free market, and not the State, should decide in all circumstances what lawful products or services succeed or fail.
Absolutely agree - in a functioning market. The question is, is the market functioning at the moment !If a lender treats existing customers badly and those customers can get a better deal elsewhere then that lender will lose business. That's how competition works.
I wish that competition and fair treatment of customers would solve the problem, but it hasn't done so.
It is, frankly, disingenuous to discuss mortgage rates while completely ignoring default rates.
Absolutely - BUT punishing customers who do pay because others don't is not the answer eitherWould the banks operate differently if they got fair treatment from their customers? The unfair treatment they get is at the hands of customers who don't pay their mortgages for years yet are able to avoid having their houses repossessed.
There has to be fair treatment for both sides.
I don't believe I have heard banks screaming at the Oireachtas committees to allow them go harder on people who are in arrears.
I can envisage a time in the near future where KBC increases rates for existing customers to fund lower prices for new customers - and those who cannot move will be in a really bad situation akin to PTSB a number of years ago.
To be fair, most people really struggle with the number of plans available and struggle to find a suitable one for them. I spent a number of weeks last year reviewing them and it was hard work indeed.
We would not have to deal with the issue of previous losses (as they would have been sold off at a huge discount), as would tracker mortgages. The banks would be starting from a clean baseline again and the historical issues would be irrelevant. How often have we heard that the rates need to be high as the banks need to return to financial stability.
And back to what about those who cannot switch??
KBC have acted as per market forces and have adjusted their business model allowing existing customers avail of lower rates if their LTV allows - I think this is reasonable on their part.
I agree with Sarenco in that I don't see how Banks should be obliged to treat existing and new customers that same. They should have the freedom to run their business how they like (obviously within legal parameters) and then the consumer should decide for themselves who to do business with.
Well if a borrower cannot switch to another lender then presumably they are in a different position to a new customer that can avail of the new enhanced deal (i.e. they are less creditworthy for some reason). Wouldn't you expect a lender to differentiate between borrowers on this basis?
Again, I agree that borrowers that cannot switch are deserving of a degree of statutory protection and I have advocated that we adopt the French model (or a variant of same) to protect such borrowers (rates capped at 133% of the average rate on all outstanding mortgages in the previous quarter).
They are now transparent. They have not been so previouslyWell at least KBC are transparent about the terms of their mortgages.
You make it sound like switching was as simple as walking into the shop to buy a litre of milk ! Switching is a relatively complex and legal process, which involves the provision of a sizeable amount of credit from an institution. The process itself can take a number of months and involves legal teams etc.Again, if another lender offers a better deal - switch! If not, what's the complaint?
Switching is a relatively complex and legal process, which involves the provision of a sizeable amount of credit from an institution. The process itself can take a number of months and involves legal teams etc.
They should just switch if they don't like what is offered to them.
Exactly! That's how free markets are supposed to work - not by State diktat.
Switching is a relatively complex and legal process, which involves the provision of a sizeable amount of credit from an institution. The process itself can take a number of months and involves legal teams etc.
Its a very straight forward process and isn't legally complex and should take a time investment of no more than a few hours over the course of a few months.
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