Wednesday, 3 March 2010

AIB Bank shun switchers; even less competition

I blogged earlier in the month about the closure of Bank of Scotland & Halifax and the negative effect on choices available to Irish mortgage-hunters that this brings.

Now AIB have confirmed that they are no longer open for mortgage switching business, i.e. moving your mortgage from Lender A to Lender B because Lender B offers better rates or a better package.

While AIB's release tells us that their "primary focus for the year ahead will be to support mortgage applications from 'First Time Buyers' and 'Home Movers', I see this move as a bad thing. If other lenders follow suit, Irish mortgage customers are then left in a position where the only way they can move mortgage is to buy another house! Think about it - your lender decides to add 2 or 3% on to your interest rate to boost their own margins and you can do nothing about it because no lender will accept switchers...

Let's hope that not all lenders follow this lead. A market without competition is not a good place to be.


Tommy McGibney said...

This is another sign, if one were needed, that our banking sector is dysfunctional and possibly beyond redemption. Unfortunately, it is highly unlikely that AIB made this decision in a vacuum. Presumably they expect the other leading banks to follow suit.

Liam D. Ferguson said...

Thanks Tommy. I'm just hoping that in due course history repeats itself and a foreign bank sees an opportunity to cherry-pick Ireland's performing mortgage book. But the experience of Bank of Scotland might make this less attractive than it might have been some years ago.