Does savings loyalty to one company help for mortgage?

tomprice

Hi there,
Just a quick question really.

If you stick with one bank or building society for all your products does this count for you if you are looking for a mortgage from them? I.e. might they lend you more because of your good history or better rate for long time customer?

Or is this not the case in the slightest?

Thanks.,

MarkyMarkD

In the olden days it might have made them more likely to offer you a mortgage.

These days, it doesn't. You definitely won't get a better rate either (at least not just for having a savings account) although e.g. Alliance & Leicester offer significant reductions in application fees on some mortgages if you have (or take out) a current account.

tomprice

Thanks.
Seems a shame not to reward but helps me to decide where my money goes so thanks.

chesky369

Well, I don't know so much - I think we're in a state of change and if you consider that at least three mortgage companies are either cancelling whole ranges of loans, or at least making them more difficult to get, then I think we may go back to lenders being more favourably inclined towards those who have saved with them.

Graeme7777

I would think that it's always good to shop around, especially for such an important transaction.

MarkyMarkD

I don't think you're right, chesky.

In the "olden days", all lenders charged the same SVR rate for mortgages and there were no special deals. Mortgage funds were rationed, and one of the ways this was done was through only lending to those who had previously saved with the institution.

We are in a far more competitive world now. All the lenders care about is whether they will get their money back. And the fact that someone who is otherwise a good risk has, or hasn't, saved with you is frankly not much help in that decision-making.

Rationing is now occurring through pricing, as it will always do in a competitive marketplace. Apart from those wanting over 90%, almost everyone will in practice be able to get a mortgage; they'll simply have to pay a lot more for it.

chesky369

Maybe - who knows any more? Certainly nobody as little as ten months ago would have seen we'd be in the position we are today.

ianmr65

chesky369 wrote: »

Well, I don't know so much - I think we're in a state of change and if you consider that at least three mortgage companies are either cancelling whole ranges of loans, or at least making them more difficult to get, then I think we may go back to lenders being more favourably inclined towards those who have saved with them.

I agree with chesky. First direct closed all new mortgages, to anyone bar exisiting account holders, and I've seen articles about the smaller Building societies, only wanting to lend to 'local' people (Royston Vasey Old Mutual - where you go for the good stuff) who have accounts with them.

So perhaps the good old days of saving, and loyalty, will be rewarded once again.

hyposmurf

I'd been a customer over 20 years with one bank,when lookin around for mortgage I tried this bank and asked them the same question.Their response was it doesnt work like that,so in fact you might as well be a new customer.

chesky369

Was this recently?

MarkyMarkD

The First Direct thing is temporary because they were swamped.

I've seen smaller building societies offering things just to local postcodes, but not conditional on existing savings.

I honestly don't think we're going to go back to the old times of mortgage rationing - there's simply no need when you can ration by price. FD were (IMHO) mad to do what they did when all they needed to do was increase their rates so they weren't best value on the market.