The mortgage market has been really competive for the last 10 years or so. As the property market boomed and lending soared, the banks and building societies fought harder and harder for your business.
They relaxed their lending criteria, to make it easier to get a mortgage.
They dropped their interest rates.
They got rid of mortgage application fees.
They paid your mortgage indemnity bond fee.
And some lenders even offered to pay your legal fees to entice you to switch your mortgage to them.
But with the credit crunch over the last few months, it appears that some banks just aren’t too worried about being competitive anymore.
First Active have now introduced a fee of €125 for their existing customers who want to top up their mortgage.
Charging €125 for the honour of doing business with them!!!
It’s First Active now, but who knows where it’s going to end.
Don’t accept it.
If your bank wants to charge you to do business with them, it’s time to make a few calls and look for a better deal.
If you are planning to remortgage or to switch mortgage lenders, you need to do it ASAP.
Here’s 3 reasons why:
1. Due to the credit crunch, the banks are tightening up the rules they use to decide how much you can borrow.
We have evidence that this is already happening, and the rules are likely to get even tighter.
2. Most of the lenders are reducing their maximum LTV, especially on remortgages. (LTV is the percentage of the value of your home which they will consider offering as a mortgage).
As LTV’s reduce further, lots of people will be unable to switch lenders at all because they won’t have enough equity.
As little as three months ago 95% remortgages were available. Now 80% - 85% mortgages tend to be the maximum (with some lenders offering as little as 50%).
This trend is likely to continue.
3. The banks appear to be on the verge of withdrawing some of the best value mortgage products (including their tracker mortgages) because, believe it or not, they are actually losing money on some of these deals.
It looks like the longer you wait, the more difficult it will be to get the mortgage you want.
So if you want to rationalise your finances, or consolidate your debts and reduce your mortgage payments or raise additional funds, your window of opportunity could be closing soon.
The credit crunch has already claimed a lot of casualties in Ireland.
Home owners have seen their homes lose about a fifth of their value.
Mortgage brokers have been forced to make staff redundant.
Estate agents have slashed pay, cut jobs and introduced forced unpaid leave.
Banks profits and share prices have been decimated.
And property developers have been forced to slash house prices to help shift their properties.
Now it appears that conveyancing solicitors are feeling the pinch too.
According to an article in the Irish Independent, solicitors specialising in conveyancing and property deals are now seeking to retrain and reskill as lower house completions and closings leave them with dramatically reduced levels of business.
According to Ken Murphy, director general of the Law Society, solicitors who were kept busy at the height of the property market have ‘little or nothing to do’ since construction related work has ‘fallen off a cliff’.