Some reasons why people won't switch mortgages

username123

Frequent Poster
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1,446
Anything would be better than what is out there now. I explained the "3 way switch" from the other thread to a few people after work last week. They fell into cohorts of:
  • Those who didnt know you could switch a mortgage, ever
  • Those who didnt know you could have a mortgage without having your entire day-to-day banking with said bank
  • Those who didnt know what their current rate was
  • Those who didnt think it was worth the hassle, even after I told them I made E18,000 cashback
  • Those who are in negative equity and can't switch
  • One lad who has a Spanish mortgage at 0.7% and laughed when I said 2.6% was a good rate!
It was honestly an eye opening conversation of the total lack of knowledge that exists among most people. Anything that can bridge that gap would be great.
 

lledlledlled

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210
Anything would be better than what is out there now. I explained the "3 way switch" from the other thread to a few people after work last week. They fell into cohorts of:
  • Those who didnt know you could switch a mortgage, ever
  • Those who didnt know you could have a mortgage without having your entire day-to-day banking with said bank
  • Those who didnt know what their current rate was
  • Those who didnt think it was worth the hassle, even after I told them I made E18,000 cashback
  • Those who are in negative equity and can't switch
  • One lad who has a Spanish mortgage at 0.7% and laughed when I said 2.6% was a good rate!
It was honestly an eye opening conversation of the total lack of knowledge that exists among most people. Anything that can bridge that gap would be great.
When I was switching a couple of years ago, I tried to explain to a friend in a pub that you can make a fair few bob with a little paperwork effort by moving around banks.
He nearly fell off his stool laughing at my suggestion that the banks are giving away free money!
 

cremeegg

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3,017
It was honestly an eye opening conversation of the total lack of knowledge that exists among most people. Anything that can bridge that gap would be great.
Would it be great ?

If everyone, or even many people, were doing what you are doing the banks would close off the opportunity. You have profited by others ignorance.

He nearly fell off his stool laughing at my suggestion that the banks are giving away free money!
In the round your friend is correct. The banks know that most people will not switch, so offering good deals up front to gain customers gives them a large base to charge into the future, they can afford to lose a few, like you, so long as it is only a few.
 

Peanuts20

Registered User
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100
There is another reason, those who are on trackers (especially on very low rates) have little incentive to switch at this moment, espeically those on very low trackers rates.
 

username123

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Ha @cremeegg yes well now that I've taken my profit it would be good I mean! It felt just showed the knowledge gap, despite so much internet material and media stuff about switching. The apathy and inertia of being secretly robbed of 100s per month in the background (by interest) just doesn't resonate with people. However, tell them that a pint costs 50c more from now on and Joe Duffy would be jammed with callers....no perspective at all.
 

NoRegretsCoyote

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774
I got 0.1pp off my rate simply by pestering the bank and threatening to switch.

It's a saving of about €20 per month for the hassle of a few phone calls.

No amount of utility switching or shopping around for insurance generates a saving like this.
 

gnf_ireland

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For a while I was on a mission to try and get people I know to switch mortgages - this was back when most were still on rates above 4% if not on a tracker. Practically everyone I spoke to agreed it is something they should do, but only 3 people I knew actually done it - for a variety of reasons. The running joke among my friends was they would stop inviting me to parties/drinks if I did not change the record :)

The main reasons people I knew did not switch were:
1. They were time poor - busy careers, young families, trying to maintain a social life. It was just not something that would get the attention it needed. This was similar to Pearce Doherty (I think) who said he had the forms on the kitchen table for months and not filled them in
2. Nervous they would not be approved - mainly due to changes in expenditure profile driven my massive childcare costs. For someone who was now paying 2k a month in childcare, it is a genuine issue
3. Better the Devil you know - ah sure the banks are only going to screw you in other ways so I don't trust them enough.
4. Apathy - pure and simple

Now things are a bit difference - most (LTV<90%) can get better rates with the same bank by simply applying to the bank. This was not really an option a couple of years ago.

I do agree though, that people tend to focus on the wrong stuff financially, and look at saving pennies when dropping pounds/euro's out of their pockets without even noticing. Switching at the time saved me around 2,500-3,000 euro a year - so a decent family holiday !!
 

Brendan Burgess

Founder
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38,095
I do agree though, that people tend to focus on the wrong stuff financially, and look at saving pennies when dropping pounds/euro's out of their pockets
Agree fully.

When a journalist calls me and asks for comment on the latest move from Ulster Bank or ptsb to start charging/increasing/decreasing current account fees, I always give the same answer - Ireland has the highest mortgage rates in the eurozone and over 100,000 people can save significant amounts each and every month by switching products within their own bank. The journalist gets confused as if I had not heard their question. Then I tell them that I have no comment on bank charges as they are immaterial in the scale of things.

But, it's much easier to understand absolute figures like 10 cents per transaction than percentages.

Brendan
 

elcato

Moderator
Messages
3,163
I have one more cohort to add to the list.
People who have moved from their original property and it is now let out. They cannot switch as they would have to report to the bank that it is no longer their PPR which they originally got the mortgage for. They would not be able to get the relevant paperwork.
 

username123

Frequent Poster
Messages
1,446
Agree fully.

When a journalist calls me and asks for comment on the latest move from Ulster Bank or ptsb to start charging/increasing/decreasing current account fees, I always give the same answer - Ireland has the highest mortgage rates in the eurozone and over 100,000 people can save significant amounts each and every month by switching products within their own bank. The journalist gets confused as if I had not heard their question. Then I tell them that I have no comment on bank charges as they are immaterial in the scale of things.

But, it's much easier to understand absolute figures like 10 cents per transaction than percentages.

Brendan
Totally agree re: banks charges. I have an eye roll every time I see Charlie Weston shouting that banks are increasing their annual fee by 50%, which is from E24 to E48 quid. "Seriously, who cares" is my general reaction to that. Perhaps you could suggest to him to highlight above cohorts and discuss why each is not not switching.....
 

Hanata

New Member
Messages
5
The people who don't even know what their current mortgage interest rate is are the most shocking imo. It just blows my mind that you can have this huge chunk of debt and not even understand the basics of it, let alone how best to manage it to your benefit.
 
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