I was standing in the queue of my bank recentlywhen I overheard a frank and honest confession from the assistant serving the customer in front of me. Aside from carrying out what he needed for that day’s transactions, he also 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 compare top mortgage rates for him and suggest a suitable remortgage.
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 central 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 a team that is looking after us and giving us a service that we enjoyand encourages us to stay. But that is straying from the point.
Her suggestion to him was that with base rates 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 laterthan the conversation. Capped rates were charging the same interest rates as variable rates 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 offeron the market. The problem with fixed rates at the moment is that no sensible bank is going to fix a low rate for 2, 3 or even 5 years, when they hope that within that time the recession will be over and base rates will be shooting upto what they were. If base rates are likely to climb, they don’t want to be locked into a rate where customers are paying back drastically less interest to borrow money than it is costing themto supply it.
I’m sure it doesn’t often happen, but currently we are seeing a very strange situation with 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 the customer money, why not? I don’t know what the customer eventually 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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