What the Halifax move will mean for the Irish consumer
THREE years ago, you could renegotiate a cheaper mortgage with your lender by just threatening to move to Halifax or NIB. At the time, Halifax and NIB offered some of the cheapest mortgages around. Those days are long gone. And as Halifax's parting takes pressure off Irish-owned banks to keep prices low, things are about to get worse.
"Halifax were the ones challenging the mortgage and current account market," says CAI boss Dermott Jewell. "The big worry now is that with the absence of such a big player, old habits may creep back in. All the Irish banks have to do now is put their hands in their pockets as they did before and slowly introduce expensive rates which simply suit themselves."
Jewell believes consumers will now be hit with higher ATM, direct debit and mortgage charges. "No doubt banks will go back to their nasty habits of applying rate increases on mortgages but not giving similar increases on money held in savings accounts," says Jewell.
Ronan Coburn, banking consultant with The Bottom Line, warned that the Halifax pullout will lead to "less competition, less honesty and less choice" for everyone.
"Given that banking regulation in Britain is stronger and more rigid than our own historical -- and still prevailing -- light-touch and inexperienced regulatory bodies, there is now a stronger likelihood that Irish banks will set about pressuring borrowers with higher lending margins and costs," says Coburn.
Homeowners on standard variable mortgages have the most to fear, warned UCD professor Ray Kinsella. "Lenders that offer trackers and cheap fixed mortgages will have to recoup the losses on these with fees and charges," says Kinsella. "Anyone with a standard variable rate on their mortgage will come under pressure."