Banks accused of trying to 'lock-in' mortgage customers as competition heats up
BANKS have been accused of trying to “lock in” mortgage customers and stop them switching.
The accusation was made after Bank of Ireland cut its fixed mortgage rates by between 0.10pc and 0.35pc.
The bank said seven out 10 of its new mortgage customers are now choosing a fixed rate – this is where the interest rate you pay on your mortgage is set for a defined period.
The new rates are for new and existing customers.
The bank said the move reflects the reduced cost of term debt to Bank of Ireland.
Bank of Ireland has reduced its one, two, three and five-year fixed rate products, including a new rate of 3.35pc for two-year fixed period loan to values of up to 80pc.
Existing customers on variable rates, or coming to the end of their current fixed rate period, can apply for the bank’s new one, two, three, five and ten-year fixed rate options.
Mortgage expert Karl Deeter said the move shows the mortgage war is heating up.
“What's interesting is that every bank is terrified of losing their customer base so they are all ensuring people lock in and doing the ‘deals’ on fixed rates rather than variable rates.”
He said Bank of Ireland was historically an expensive lender.
“For Bank of Ireland to get competitive - in particular giving away so much money at the same time with the cashback offer - shows how profitable lending is for them and how desperately they want to hold on to it.”
KBC recently cut its mortgage variable rates for new customers, while AIB cut rates three times in the past 18 months.