Interest rate mortgage cut offer by bank

...And Justice

Hi folks, I'm currently on a variable 3.7% mortgage with my current lender, then out of the blue they offer to fix it at 3.5% for 1 year. Now we all know banks don't offer interest rate cuts for the consumers benefit. Is there any folks in here that may be working in the industry and see a KPI for a variable rate cut in the near future? 12 months is a very short time in the life of a mortgage.

There must be some market uncertainty to be offering me a rate cut and fix it? Or have I a big tinfoil hat on? :pac:

I've been with my lender 10 years.

phormium

It's usually a retention drive, while they have you tied into a fixed rate you can't switch to another lender.

dar100

...And Justice wrote: »

Hi folks, I'm currently on a variable 3.7% mortgage with my current lender, then out of the blue they offer to fix it at 3.5% for 1 year. Now we all know banks don't offer interest rate cuts for the consumers benefit. Is there any folks in here that may be working in the industry and see a KPI for a variable rate cut in the near future? 12 months is a very short time in the life of a mortgage.

There must be some market uncertainty to be offering me a rate cut and fix it? Or have I a big tinfoil hat on? :pac:

I've been with my lender 10 years.

I'm sure they're up to something, however, it makes no sense to offer you 0.2 percent drop for 12 months I find it strange!!

Maybe there is another drop coming by other banks, but in reality who knows what's happening

...And Justice

phormium wrote: »

It's usually a retention drive, while they have you tied into a fixed rate you can't switch to another lender.

Sounds about right, maybe there's an interest rate cut on the cards with the new property boom. I think I'll stay put and see what happens. Thanks folks.

bmwguy

I got it too. Was it AIB? If so it depends on your LTV rate being below 80%. Less liability on their balance sheet.

Apologies....read it properly now it's different what you were offered

dar100

bmwguy wrote: »

I got it too. Was it AIB? If so it depends on your LTV rate being below 80%. Less liability on their balance sheet.

Apologies....read it properly now it's different what you were offered

Van I ask what you were offered off AIB?

HeidiHeidi

I got that fixed for one year offer as well, with other slightly higher rates for 2 and 3 years.

I'm highly suspicious of it - i very much doubt they have my best interests at heart!! I'm very interested in opinions on it.

Senna

These fixed rates have been advertised on the website for ages, I was thinking about fixing a few months ago, but didn't.
They just sent you a letter telling you what the fixed rates are, they aren't new. There has been very little change in the market this last year.
Banks buy books of loans rates at a set amount, there may have been a smaller than expected uptake on a certain book, so they are pushing customers to take up the offer. The banks aren't losing any money by you going onto this fixed rate (they might actually lose or make more money than the SVR, but that's not relevant here) they also are locking the customer in for 1/3/5 years and that is good for them.
Competition in the market is the only thing likely to push SVR down and there seems to be no movement there whatsoever. ECB rasing rates is much more likely but not in the quarter or next.

...And Justice

Senna wrote: »

These fixed rates have been advertised on the website for ages, I was thinking about fixing a few months ago, but didn't.
They just sent you a letter telling you what the fixed rates are, they aren't new. There has been very little change in the market this last year.
Banks buy books of loans rates at a set amount, there may have been a smaller than expected uptake on a certain book, so they are pushing customers to take up the offer. The banks aren't losing any money by you going onto this fixed rate (they might actually lose or make more money than the SVR, but that's not relevant here) they also are locking the customer in for 1/3/5 years and that is good for them.
Competition in the market is the only thing likely to push SVR down and there seems to be no movement there whatsoever. ECB rasing rates is much more likely but not in the quarter or next.

That's what I thought too, the ECB is more likely to go up in the next two or three quarters , if it does go up. I'll have to think about this before I change or not.

Merowig

Why do you not switch your mortgage provider - some have 3.5 variable...

Senna

Merowig wrote: »

Why do you not switch your mortgage provider - some have 3.5 variable...

NE
Change in employment
Nearing end of term
Or just not eligible with any other bank

Merowig

Or lethargy - many avoid switching - being mortgage, electricity & gas et. Good for the companies, bad for the consumer.

...And Justice

Merowig wrote: »

Or lethargy - many avoid switching - being mortgage, electricity & gas et. Good for the companies, bad for the consumer.

Just got a letter from KBC, to switch and save, and get €3000 for doing it. Sadly I don't qualify as the mortgage isn't big enough.

bk

Merowig wrote: »

Or lethargy - many avoid switching - being mortgage, electricity & gas et. Good for the companies, bad for the consumer.

In fairness, it takes about 30 minutes to switch your gas & electric. Mortgage can take months of trouble with solicitors, etc.

One way that the government could inject more competition into the market, would be to make it much easier to change, like they did for the mobile phone and g&e markets. Eliminate the need for solicitors, etc.

ellobee

Yeah i got one of those letters as well and I am suspicious, kbc announced a rate cut recently and I'm sure I heard something about a new entrant in the mortgage market, I just cant remember who it is, also there has been a surge in mortgage lending in the first quarter of this year. to me it looks like there might be a bit of a price war coming, Irish variable rates are nearly double the european average, so there is plenty of scope for reductions, I'm hanging tight for the time being

Merowig

ellobee wrote: »

Yeah i got one of those letters as well and I am suspicious, kbc announced a rate cut recently and I'm sure I heard something about a new entrant in the mortgage market, I just cant remember who it is, also there has been a surge in mortgage lending in the first quarter of this year. to me it looks like there might be a bit of a price war coming, Irish variable rates are nearly double the european average, so there is plenty of scope for reductions, I'm hanging tight for the time being

http://thefrankmortgage.ie/ might enter the market at some point.


bk I agree that changing a mortgage is a hassle, but also the savings should be significant.

Ardrageen

ellobee wrote: »

I'm sure I heard something about a new entrant in the mortgage market, I just cant remember who it is,

Frank Mortgage were supposed to be entering the market but they have withdrawn their application for authorisation as a mortgage lender by the Central Bank of Ireland:(

However Finance Ireland are launching their mortgage product later this year so hopefully this will improve things.

Merowig

Thank you for the update Ardrageen!

bmwguy

dar100 wrote: »

Van I ask what you were offered off AIB?

Aib offering reduced rates for people with LTV rate of less than 80% and another rate reduced further for people with LTV less than 50%.

3.1% I think it was