HSBC 2 Year fixed rate mortgage
The best things in life come to those who ask for them. At least, that's the message some of the UK's biggest banks are sending out to mortgage borrowers. Guardian Money has found that several banks and building societies are privately offering bespoke mortgage deals to certain existing customers, giving them lower fees and rates than those they are publicly advertising.
The most covert is HSBC and its sister bank First Direct, both of which advertise a range of mortgage deals for existing customers on their websites, but keep their best deals secret.
If one of these banks' preferred mortgage customers calls up and asks for a better deal than those published on the websites they could be offered an even better rate or a lower fee, which could amount to a saving of up to £500 or more. The offers always top the deals being advertised online, including any already discounted for existing customers.
Even when it comes to its market-leading two-year fixed rate of 1.49%, HSBC is prepared to undercut itself and reduce the huge £1, 999 fee by at least £100 for desirable customers. Other fees are being cut by £300 and interest rates reduced by at least 0.1%.
These deals are not advertised because "it isn't a one size fits all policy", according to spokesman James Thorpe. "We can't offer them to every single customer, " he says. "The customer's creditworthiness and situation, the mortgage they are interested in, their loan-to-value and the size of the loan will all play a part in our ability to offer a reduction."
Thorpe adds that at the moment existing customers who hold a current account with the group will always be able to "pay less" for a mortgage than borrowers who don't.
What if a HSBC mortgage borrower banks with First Direct? This will "most likely make a difference, as we will have a better indication of [a customer's] creditworthiness, " Thorpe says.
All customers who are interested in these bespoke deals apparently need to do is to "call up and ask" if there are any unadvertised rates or discounts they can "access" as an existing customer, he says.
A tailored approach
HSBC says its approach is far from unique and that "most banks employ a retention pricing strategy". But the Council of Mortgage Lenders (CML) says that only "a minority" of lenders offer unpublicised, bespoke deals to borrowers.
"The rationale among these lenders is that, with their knowledge of the customer, they can offer a bespoke deal that will not necessarily be the same as that offered to other customers, " CML spokeswoman Sue Anderson says.
The strategy is common among lenders in the United States, according to John Charcol broker Ray Boulger, and could become more widespread on this side of the Atlantic as lenders upgrade their technology. "The more data your lender has got about you, particularly if they can look at how you manage your current account, the greater their ability to tailor a mortgage to you, " he says.
So which other lenders are willing to negotiate rates? Barclays, Royal Bank of Scotland, NatWest, Halifax, Bank of Scotland, Lloyds TSB and Yorkshire building society all say they do not negotiate or offer bespoke deals to existing customers, claiming they want to be "transparent" about their pricing. Nationwide seems particularly opposed to the idea: "Nationwide does not have 'tailored' or hidden rates, " a spokesperson says. "We have developed a simple and straightforward way to reward our members' loyalty. Currently, this is a 0.10% per annum discount to existing mortgage customers."
Among the smaller mortgage lenders the Marsden building society, which has 11 branches across Lancashire, takes a tailored approach. "We offer specific retention deals to existing customers which aren't advertised on the web or anywhere else, " says chief executive Rob Pheasey. The fees on these offers won't be as high as on the mortgages advertised to new customers because the society's own costs "aren't as high", he says.
Offers are pro-actively sent to existing borrowers by letter three months before the borrower's current deal expires, and are based solely on the society's assessment of the credit risk of that individual customer, particularly the LTV of the mortgage: "We don't improve our offers because you have other products with us, " Pheasey says.
Similarly, Kent Reliance building society also says it offers "bespoke products", but this time only to new customers introduced to the society by mortgage brokers. "We do not display the full range of products on our website or make them available directly to customers, " spokesman Alastair Pate says.
Bespoke deals for everyone
Santander, meanwhile, doesn't advertise any rates at all for existing customers. Instead, spokesman Phil Cliff says, "rates are based on the customer's individual circumstances, taking into account everything we know about them as an existing customer." This includes your mortgage type (whether it is repayment or interest-only), whether you've missed any payments, your overall income and outgoings, and whether you bank with Santander.