The banks do manage to get some positive PR even in the current anti-banking environment. Yesterday’s Independent carried a story by Charlie Weston about banks stating that they will give a ‘cut price rate’ to borrowers who lose their homes.
This hinges on the difference between secured and unsecured lending rates, typically an unsecured loan (where the bank holds no asset which backs it up) will attract rates of 10% and more, but mortgages can be as low as 1.5% depending on what rate you got at the outset.
AIB and EBS are going to let borrowers who hand back their home pay back any outstanding balance at their mortgage rate. What we don’t seem to know (because through non-disclosure agreements or absence of short-sales) is whether this would have been the case anyway.
There is certainly a legal challenge in the making for seeking that a loan which becomes unsecured having been secured remains on similar conditions that would have existed had it been performing. There is (was) penalty …