Remortage - Different Rates for Existing Customer Vs New Customer

Akta86

Hi all

I have an existing fix rate mortgage ending soon and had noticed my existing lender has now dropped their rates considerably for a 5 year fix, making it cheaper to stick with them instead of switching lender.

However, it appears the dropped rate is only for new customers and as an existing customer with over 50% LTV.  If I stick with them, I get a nearly 1% dearer rate for the same product! 

In my years of mortgaging/remortgaging, this is the first time I have come across this.  Is it normal? I know the "loyalty" penalty is widespread in other markets but this is the first time I have seen this with a mortgage lender/bank and just feels really unfair.

Many thanks 

ACG

Some lenders do it, some do not. I would not say its normal but it is also not uncommon. 

dunstonh

In my years of mortgaging/remortgaging, this is the first time I have come across this.  Is it normal?

It happens sometimes.  Mainly if the lender is looking to increase their lending book by buying market share or has changed their underwriting and has more confidence in future applications than they do with historic.  i.e. if the lender has decided to cherry pick higher quality lending, then they will give it a better rate than lending that was set to a lower lending criteria.    

I know the "loyalty" penalty is widespread in other markets but this is the first time I have seen this with a mortgage lender/bank and just feels really unfair.

Nothing to do with fairness or loyalty.  

Akta86

Fair enough.  Appreciate the responses. thank you