An Unusual Mortgage Talk From The Bank Assistant
Tuesday, February 17th, 2009 Subscribe To Our Feed
Standing in the queue of my local bank last week I overheard a frank and honest confession from the assistant serving the customer in front of me. Aside from carrying out that day’s transactions, he told her that his fixed rate mortgage deal was coming to an end and he was about to be put onto the bank’s standard variable rate mortgage scheme. He was asking her to help him compare top mortgage rates for him and suggest a new mortgage.
Banks being banks and progress being what it isof recent years, the assistant and no-one else in the bank was able to help. Her answer was for him to call the central Customer Retentions team. Doesn’t that say a lot about the bank and how it values customers – not Customer Care Department or Customer RelationsDepartment, Customer Retentions. A team dedicated to keeping customers, rather than a team looking after us and giving us a service that we enjoyand encourages us to stay. But that is straying from the point.
Her suggestion to him was that with rates currently so low and likely to drop even further, that the variable rate mortgageproducts offered as standard by the bank were probably about as low as he could get. Fixed rates wouldn’t drop with further rate cuts and one came only days later. Capped rates were charging the same interest rates as variable rates and trackerproducts weren’t likely to follow base rate cuts any furtherfor the foreseeable future.
She still gave him the number of the Customer Retentions teamto speak to, but suggested that the answer would be to accept the variable rate offered and keep an eye on mortgage rates. Let the rates drop a little further, basically to rock bottom, and then see what’s on offer. The problem with fixed rates at the moment is that no sensible bank is going to fix a low rate for a customer for 2, 3 or even 5 years, when they hope that within that time the recession will be over and base rates will be shooting up. If rates are likely to climb, they don’t want to be locked into a low rate where customers are paying back drastically less interest to borrow money than it is costing them.
I’m sure it doesn’t often happen, but currently we are seeing a very strange and unusual situation with interest rates. To be told that rather than compare top mortgage rates just to accept the standard variable rate mortgage offered is very unusualand not typical. But, if it saves money, why not? I don’t know what the customer eventually decided to do when he got back home, maybe he phoned the Customer Retention team and got a quote or maybe he decided to speak to an independent mortgage advisor who would give him a view of the whole mortgage market. Personally, I’d have tried doing both.
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