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An Interesting Mortgage Advice From The Bank Assistant

March 8, 2009

I was standing in the queue of my local bank branch recentlywhen I overheard a frank and honest confession from the clerk serving the customer in front of me. Aside from carrying out what he needed for that day’s transactions, he told her that his current 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 compare mortgage rates for him and suggest a new mortgage.

Banks being banks and branch progress being what it isof recent years, the clerk and no-one else in the bank branch was able to help. Her answer was for him to call the Customer Retentions team. One of these call the number and press loads of buttons numbers. Doesn’t that say a lot about the bank – not Customer Care Department or Customer Relations, Customer Retentions. A team dedicated to keeping customers, rather than a team that is looking after us and giving us a service that we enjoy. But that is straying from the point.

Her suggestion to him for the best finances was that with base 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 getwith the bank. Fixed rates wouldn’t drop with further base rate cuts and one came only days later. Capped rates were charging the same interest rates as variable ratemortgages and trackerproducts weren’t likely to follow future base rate cuts any furtherfor the foreseeable future.

She still gave him the number of the Customer Retentions team, but suggested that the best answer would be to accept the variable rate offered and keep an eye on future mortgage rates. Let the base rates drop a little further, basically to rock bottom, and then see what’s on offer. The problem with fixed ratemortgages at the moment is that no bank is going to fix a low rate for 2, 3 or even 5 years, when they hope that within that time the current recession will be over, the economy will have recovered and base rates will be shooting up. If base rates are likely to climbin the near future, they don’t want to be locked into a low rate where customers are paying 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 situation with borrowing interest rates. To be told that rather than compare current mortgage rates just to accept the bank’s standard variable rate mortgage offered is very unusual. But, if it saves money, why not? I don’t know what the customer eventually decided to do when he got home, maybe he phoned the Customer Retention team or maybe he decided to speak to a mortgage advisor who would give him a view of the whole market. Personally, I’d have tried both.

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