What are banks doing to help customers in the current economic climate?
There are statistics to prove it, however, we don’t need a show of figures to convince us that consumer confidence in the banking system and economy is currently at rock bottom. Nationwide have recently reported a pathetically positive 8% rise in their consumer confidence index lifting it from a record low of 51 to 55 and this last week also sees the interest rate fall an astounding 1.5%, a sure move to try to re-establish our desire to ‘spend’ by the Government and Bank of England.
But we ask what are banks doing to actively help their customers in the current market conditions? Irini Tzortzoglou, Deputy Manager of Piraeus Bank UK (PBUK), who offer overseas mortgages (Bulgaria and Greece) and deposit account facilities, comments, “One of the effects of the recent world-wide crisis has been the education of consumers and we have all come to understand a bit more about how and where banks find the money they then lend to their customers. It is clear that despite the drop in base rates, it will take sometime and possibly another intervention from central banks before we see a significant drop in inter-bank lending rates and increased lending facilities. Until these changes take place, we have found that listening to customers and trying to accommodate their personal circumstances wherever possible is easier, faster and cheaper while gaining loyalty in our customers and job satisfaction in our staff.”
Despite being stringent with their underwriting criteria, meaning that they have reduced how much and who they lend to, PBUK’s steady and conservative approach has helped them maintain their secure financial position today, even being able to expand their business through bank acquisitions. Alistair Riddle, Credit Manager for PBUK adds, “If we stopped people going into debt they could not really afford to repay, I am personally very glad and we now find that the customers have more confidence and respect for us because of this. Having said that, there is of course a number of customers who qualified for loans which we were very happy to make but who now struggle a little or simply feel insecure about. In these instances we try to help as much as we can.”
“Where customers such as Andrew Banks, who have kept an impeccable payment record with the bank contacted us, we in appreciation, were more than happy to assist,” continues Alistair.
Andrew Banks: “Although my personal circumstances have not changed dramatically since I took out my loan, having lower monthly installments on my overseas mortgages is making a difference to my confidence levels for the next couple of years. I am very pleased with the positive response I got from Piraeus Bank UK”.
Another customer of the Bank, G.P. a Financial Advisor from Bristol, says:
“The one year interest-only period of my otherwise repayment mortgage was coming to an end. Because my age does not permit a long term mortgage, the monthly instalments of capital and interest would mean €975 more which would be difficult for me to find in the current economic climate. I contacted Piraeus Bank to ask to continue to pay only interest while I might find it difficult to source a few hundred Euros more per month. I am very happy and grateful to Piraeus Bank for agreeing to this so I can now take my time to consider my options.”
Alistair Riddle advises, “Requests to change the terms of existing mortgages never fall on deaf ears at our Bank. We do look to be accommodating where possible, but we must ensure that the fundamentals of repayment capacity and sticking within our overall product parameters remain in place. Where, due to a change in circumstances, a customer can no longer meet the existing repayment obligations, we look in depth for possible solutions. It should be noted that there are instances where the sale of a property is the most beneficial solution for the customer. In these cases the Bank would far rather work with the customer than against and we are extremely proud that PBUK has not made a single Repossession Application to the Law Courts with regards to our Bulgarian and Greek mortgage customers.”
So why is PBUK willing to buck the trend and work with its customers? In a nutshell, PBUK uses traditional banking values such as making sure that from the outset the customer really can afford the proposed mortgage via a robust underwriting process by humans not machines while understanding and believing in the markets it operates in while using plain common-sense in its approach to business and customers alike.