KBC reduces rates for new customers only - not for existing customers

I don't remember anybody getting annoyed when banks were
cutting margins on trackers or fixed rate mortgages - same product, different rates.

How are trackers, fixed rate mortgages, & SVR mortgages the same product? I've fixed before and seen fixed rates go down (not long after I fixed). It annoyed me but I had fixed and realised it was my problem. These are SVR mortgages. The key is in the V. KBC are changing the SVR but practically fixing it for existing customers. Can you not see why customers would get annoyed at that? It's OK to be annoyed you know.

It's business and it doesn't have to be fair but as a customer I don't just have to grin and bear it either.
 
I don't remember anybody getting annoyed when banks were cutting margins on trackers or fixed rate mortgages - same product, different rates.

@Sarenco I think the difference here (or at least in my view) is the word variable. A tracker is a % above a standardised rate that you sign up to, and therefore know its not going to change unless the underlying rate changes. A fixed is a fixed rate for a period of time, that again you sign up to.

Variable is meant to be variable and move with something - most people expect to be market conditions. If someone signs up to a particular variable product, they expect to benefit from cuts to that rate as well as increases to it. Otherwise it is an upward only variable rate. Most people I know wished to maintain variable rates for 2 reasons - a. they are overpaying their mortgage and dont want to be penalised or b. they expected rates to fall over the next while.
Can you explain what you would expect to happen in the event you signed up for a 'LTV<60% variable mortgage' product and the bank decided to reduce the rate for it? Do you genuinely believe that their should be multiple versions of the same product, and in this case, can you inform us what you consider the word variable to mean in this case?
 
Now that they have multiple products their mortgage arm is probably affecting their banking and home insurance departments.

Agree completely here. I have already cancelled by credit card with them over this issue. I have also advised them all deposits with them will be transferred out on maturity, without exception. I would also not consider them for house insurance next year either.

Sadly, it will make limited difference unless sufficient people do it. Given how low the switcher market is at the moment, I cannot imagine many/any will do a double switch in a short period of time. I have no doubt that any attempt I make on this will be challenging, but I am willing to give it a go ! What else can I do other than wait for KBC to change tactics, which could take years !
 
Well, a variable rate is simply a rate that can change at the discretion of a lender. It isn't tied or referenced to any external rate or index (such as EURIBOR, etc). Disproportionately increasing the rate charged is restricted by the ability of borrowers to refinance elsewhere or the possibility that increasing rates will simply increase impairments.

I was simply making the point that lenders often offer the same loan product at different margins depending on when a loan was originated. Obviously variable rate, trackers and fixed rate mortgages are not the same product.

I am not trying to defend KBC's pricing strategy. I personally think Ulster Bank's formulation of a discount to their SVR for the lifetime of the loan, depending on the borrower's LTV, is far more transparent.
 
Well, a variable rate is simply a rate that can change at the discretion of a lender.
The question though is it unreasonable to expect that if the rate changes for the same loan product on a variable mortgage, should this be affected across all customers on that identical product? Surely in this case the variable rate has changed at the discretion of the lender, but they are further 'artificially' segmenting the customer base to suit themselves.
Tracker and Fixed rates are different in this regard, as they are baselined against a static value.


I am not trying to defend KBC's pricing strategy.
I would be amazed if anyone did to be honest. It seems to be even worse than BOI (which I did not actually think would be possible). Its one thing not allowing customers to move between different products, but a completely another matter charging differently for the same product.

Time will ultimately tell how successful KBC are with their policies, but I do believe it will back-fire on them in the medium term. Those who moved to KBC recently will not fear moving again after a few years.
 
It looks like going into sematics here again, but the SVR is a misnomer then. It should have been defined as “standard arbitrary rate” or “semi-fixed” or something. “Variable” in Webster dictionary is “able or apt to vary, subject to variation or changes.” Any reasonable person understands that rate changes are driven by funding costs, what else? Tracker mortgage is simply a version of a variable mortgage type where changes are linked explicitly to the external rate that in turn determines those funding costs. Hence many people in this forum who lost their trackers cite their contracts where "variable rate" and "tracker rate" were used interchangeably, and confusingly, by banks themselves.

When taking the SVR mortgage I queried the mortgage officer on the differences between SVR and a tracker, and what “discretionary” in the contract stands for. He said the difference was legalistic and that SVR and trackers always co-varied in the past. My solicitor said the same thing. I know that the SVR contract if read verbatim implied any rate whatsoever but this is not how the mortgage was explained or perhaps understood by the bank officials themselves at the time. I don’t know if they were telling the truth but you could also see in any timeline graphs that SVR and trackers did co-vary in 2000s, trackers were lower but they went up and down together, with lags. So on the one hand you have a contract with an arbitrary rate, but on the other hand you have verbal assurances that the rate is not arbitrary. I know one goes with the written contract but the market economy is also based on trust.

Ultimately it would be nice if only fixed or true variable contracts (explicitly linked to something, or fixed at the interval, like it is 3% now but can not go higher than 1.5% over the mortgage lifetime) were offered and remained. SVR gives too much discretion that the banks abused.
 
I'm planning to move my mortgage to KBC to avail of the new rates, including my current account to avail of the discount.

I'm wondering, aside from not having offered this rate reduction to existing customers, is there any other way in which this bank treats its customers terribly?
 
I'm wondering, aside from not having offered this rate reduction to existing customers, is there any other way in which this bank treats its customers terribly?

Nope. I've had a few niggles with them but nothing that couldn't be resolved with a phone call and I'd probably have had the same niggles with any provider.
They actually have a huge advantage over other providers (you can pay extra off your mortgage at any time, saving you the interest and you can take this extra back at some time in the future).

New customers are getting the same mortgage as me at a rate that saves them €145 a month over mine. If it wasn't for that I'd have no problem at all staying with them.
 
Tosh

Well spotted! I had completely missed it and have now edited their press release accordingly.


Brendan
I spoke with KBC the other day and they have informed me that since I drew down 12months ago they wont look for any of the money back. They would also welcome me back as a client and pay me €2k + lower variable rates. I am moving to Ulster Bank (Which are giving me €1.5k to cover the fees) and I am not going back to KBC, as they just seem to screw existing customers.
 
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