Mortgage lenders are starting to offer existing customers preferential rates and lower fees in order to stop them from switching to another lender. Mortgage lenders, just like companies in many other sectors, have long inflicted a “loyalty penalty” on long-time customers. This often took the form of switching them to standard variable rate mortgages when their fixed term ran out, but some lenders are now starting to offer existing customers rates equal to or better than those used to entice new customers, in an attempt to retain their business.
Key Takeaways:
- Many mortgage companies are rewarding home buyers who want to stay with them when their fixed-term rate ends with better deals than new customers.
- These deals that are being offered for loyalty are not being advertised by the banks and building societies but are under the counter deals.
- Loyalty penalties that are being offered for mortgages are being applied to home loans too and these are far more expensive and add thousands to mortgage costs.
“Households are routinely warned about the so-called ‘loyalty penalty’ that sees them offered a worse deal than new customers on everything from house insurance and energy to broadband.”