‘Banks must explain mortgage switch options more clearly’

THE Central Bank has warned that banks arelacking clarity and transparency when communicating with customers who switch their mortgage product from a tracker rate to a variable or fixed rate.

The bank is now calling on lenders to include full information on the ‘small print’ consequences to customers of switching loan product, specifically from a tracker mortgage to alternative rate loans.

The calls came following the publication of its examination into switching practices relating to tracker and other mortgage products, based on studies it carried out over the past two years. The bank found that, in numerous cases, communication on the financial implications and consequences of switching weren’t fully transparent to the customer. The Central Bank said: “As a result of this finding, mortgage lenders have been requested to fully disclose the impact of any switch from a tracker mortgage rate in all customer communications, with immediate effect. Customers must be notified that switching from a tracker rate may mean they’ll lose the ability to avail of a tracker rate mortgage in the future.”