Ulster Bank U-turn on mortgage application
Q&A: Best bet is to appeal to bank’s financial benefit, not its sense of fairness
For all the emphasis on centralised lending decision and algorithms, there is still a place in banks for personal discretion. Photograph: Alan Betson
I currently own our family home in my own name. My husband and I are looking to move and jointly apply for a new mortgage. I have had a tracker mortgage with Ulster Bank for 13 years. We were told two years ago that we could keep the balance of our mortgage on the existing tracker rate for a 10-year period and the additional amount to be added on could be at a fixed or variable rate depending on our preference.
We recently returned to the bank to be told that this is no longer an option. We have friends who have recently moved and availed of the deal the bank originally suggested to us. Surely there is a precedent there to allow us to do the same and the bank would be happy maintain our business?
Ms A.Y., email
Your first mistake is presuming any bank these days has any interest in “maintaining” a relationship. The banks spend a lot of time telling everyone in soft-focus advertisements how important they are as customers – Ulster Bank’s current offering carries the slogan: “Helping each other is help for what matters.” But the truth is that banks care only about the bottom line. Customers are merely a vehicle for delivering a net interest margin, and therefore profit.
You might say this of most businesses of course. The difference is that, competition being what it is, most businesses understand that keeping customers happy is an important part of the process. As all the banks have the same approach in what is currently a pretty uncompetitive market, they don’t worry themselves about such niceties.
In general, my first question would be whether you had that assurance of two years ago in writing. But, in this case, I doubt it would make any difference.
Any bank will tell you that they can judge a mortgage application – and offer rates – only on the basis of the circumstances at the time of the actual application – not on the basis of an earlier preparatory approach. I’d like to think your current lender mentioned this to you at the time you approached them two years ago on the subject. Unfortunately, the likelihood is that they didn’t.
You can see the sense from the bank’s point of view. Products and policies change as do the nature and type of rates on offer.
Tracker mortgage scandal
Banks are currently battling the cost of their self-inflicted tracker mortgage scandal. They are having to work hard to maximise profit from new and existing business, where possible, to meet this largely unbudgeted cost.
Having said all that, your best bet is to appeal not to the bank’s sense of fairness but to their financial benefit.
You are a mortgage customer of 13 years’ standing – and possibly a general customer over a much longer period. In that time, presumably, you have had an impeccable credit record – ie you are a good credit risk at a time banks are still recovering from some poor decisions on lending.
Even if they allow you to carry over your tracker on the current outstanding mortgage amount, they will make a bigger margin on the additional loan value and, hopefully from their point of view, lock those payments in for a longer period. And after the 10 years, they get to improve their profit margin anyway on the amount currently covered by the tracker.
Finally, while banks will always (correctly) refuse to discuss individual cases, if you have the details of the dates and amounts involved in your friends’ cases, it can only bolster the argument.
Don’t take first refusal on the tracker rate carryover. For all the emphasis on centralised lending decisions and algorithms, there is still a place in banks for personal discretion. you simply have to get high enough up the managerial food chain for someone able to exercise such discretion.
I’m sure the bank would prefer not to entertain your tracker carryover but it makes financial sense for them to do so rather than lose profitable, low-risk business. Appeal that decision before you go any further but do so on a business basis.
Just don’t appeal to their sense of fairness.