An Unusual Remortgage Confession From The Bank Clerk

Standing in the queue of my local bank last week when 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 fixed rate mortgage was coming to an end and he was about to be put onto the bank’s variable rate mortgage scheme. He was asking her to help him compare current mortgage rates for him and suggest a new mortgage.

Banks being banks and progress being what it is, the assistant and no-one else in the bank was able to help. Her answer was for him to call the Customer Retentions team. Doesn’t that say a lot about the bank and how it values customers ? not Customer Care or Customer Relations, Customer Retentions. A team dedicated to keeping customers, rather than looking after us, treating us as valued customers and giving us a service that we enjoy and encourages us to stay. But that is straying from the point of this writing.

Her suggestion to him was that with rates currently so low and likely to drop further, that the variable rate mortgage products offered as standard by the bank were probably about as low as he could get with the bank. Fixed rates wouldn’t drop with further rate cuts and one came only days later. Capped rates were charging the same interest rates as variable rate mortgages and trackers weren’t likely to follow future base rate cuts any further for the foreseeable future.

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

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