Brendan Burgess
Founder
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I find that quite depressing really. Surely the deliberate gouging by a bank of its existing customers is one of the most important angles to the story? Especially given the evident vulnerability of a large portion of the existing customers who have no option to avoid being exploited by switching mortgage providers as they'd have in a properly functioning market.On Drivetime tonight, the issue was discussed twice - once with Michael Dowling and later with Karl Deeter, and neither of them mentioned the exploitation of existing customers.
Surely this is common practice across all service providers? UPC, Sky, insurance companies etc all do this and we don't have newspaper headlines about it. .
Don't get me wrong, I agree cuts should be for all, but it isn't just banks that do this.
Hi Sister
But I seem to be one of the few people annoyed by it. And I don't even have an SVR mortgage! I really don't get it.
On Drivetime tonight, the issue was discussed twice - once with Michael Dowling and later with Karl Deeter, and neither of them mentioned the exploitation of existing customers.
Brendan
But lets say the following:
My existing BOI rate is 4.35%. For new customers the SVR is 4.5% so an increase of 0.15%
There are 'discounts on SVR' available based on customers with certain LTV ratios.
BOI will say that they are not increasing the mortgage rate for existing customers where their LTV does not qualify for a discount, so why should they do the reverse where the LTV ratio does qualify.
Those with lower LTV ratios have the option of switching (at least in theory), although there is a cost associated to it
Which would be worse - move everyone onto the new rates based on their current LTV ratios, or not move anyone at all. I cannot see them being so nice as to leave existing customers on 4.35% and new customers on 4.5% - this could be seen as discrimination of the new customer. The ones where the LTV is higher have less choices open to them, so could be seen as being 'abused'
and then coincidentally adverts straight away for BoI mortgages and I think another provider too.
Yes, but is the real barrier to moving not the associated cost of moving the mortgage. I don't see how it is practical for most people to move, unless there is a decent gap between their existing rate and the new rate being offered.In a competitive market, they would have to do that as Mary would simply switch to another lender.
Yes we all agree with this in general and this is another discussion. The SVR rates in Ireland are crazy compared to Europe, but how much of this is direct result of some seriously low tracker mortgages existing out there, which are well below European average. I am not saying it is rightIn effect , this is what they have actually done. The banks pushed up the mortgage rates for all LTVs and all SVRs since 2010.
Threadser - I am not sure what your argument is here. Of course BOI will want to see an updated valuation to prove your property has a LTV of less than 75%. Otherwise they are either using old data (original valuation when you got your mortgage) or basing it on some index value.These rate cuts should have been passed onto customers without this requirement.
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