Banks punish own mortgage customers for their loyalty
SOME banks are charging their own customers far more for fixed-rate mortgages than new borrowers, the Irish Independent has learned.
A number of lenders were last night accused of discrimination after it emerged they were charging some of the highest rates for existing customers who wanted to lock in to a fixed-rate home loan.
But new customers are able to avail of rates that are up to an unprecedented 2pc cheaper.
Permanent TSB, Bank of Ireland and KBC Homeloans have been accused of punishing customers for being loyal because they charge higher fixed-rate mortgages to existing custo- mers.
Thousands of people want to lock in to fixed rates following the move by Permanent TSB (PTSB) to increase its standard variable rate by 0.5pc, with others expected to follow.
Some fixed rates are at historically low levels.
But mortgage brokers said some of the rates being offered to existing customers who wanted to fix were so high that it did not make fixing worthwhile.
PTSB offers a new customer the option of fixed for five years at 3.7pc, but an existing customer who wants to lock in to the five-year fixed rate will be charged 5.75pc.
There is a difference of €293 a month in the repayments on a €250,000 mortgage over 30 years between the two rates.
Consumer watchdogs said the higher rates being imposed on existing mortgage holders seeking to fix their mortgages was an attempt to stop people fixing their mortgage rate.
"People need to be aware that there is crazy mortgage pricing going on out there," Consumers' Association chief executive Dermott Jewell said.
He also accused the mortgage industry of confusing people by offering different rates depending on what percentage of the value of the home was being borrowed. The introduction of so-called tiered loan to value rates were hugely confusing for consumers.
The Irish Independent last week revealed that around 350,000 homeowners have standard variable-rate mortgages, on which banks are free to increase the rates whenever they want.
Switching mortgages is no longer an option for many homeowners as most of those who took out mortgages in the past few years are in negative equity. This is where they owe more on the mortgage than the house is worth.
A spokesman for PTSB said that it had always had discounted rates for new customers and denied it was punishing its existing customers now that it had raised its rates.
He stressed that the 3.7pc rate over five years was only available to new customers borrowing less than 50pc of the value of their home.
A spokeswoman for Bank of Ireland admitted it offered lower rates to new customers, but said this was done to help new buyers with the "additional costs which they incur" when they bought a first home.