Fears grow on mortgages

Will Alliance & Leicester's 550,000 mortgage customers suffer from higher-interest loans and less attractive products if it merges with Bank of Ireland?

Philip Cartwright, a director of London & Country, a Bath-based mortgage broker, is concerned. He says: "Bristol & West used to have market leading products but now only have them occasionally since they were bought by Bank of Ireland a few years ago."

The standard variable rate charged by Bank of Ireland, 7.1%, is higher than Alliance & Leicester's 6.95%. A&L is also more generous with its mortgage indemnity guarantees, which are charged on mortgages of above 90% of a house value rather than 80% as offered by Bank of Ireland.

An A&L spokeswoman says all the bank can confirm is that it is in talks with Bank of Ireland about a possible merger. "At this stage we cannot give out any information about how it will affect our customers."

John Charcol, one of the biggest mortgage brokers in the UK, says that the two banks sell very different products to very different customers. Bank of Ireland specialises in flexible product design on fixed rate mortgages sold through brokers, while A&L's strength lies in its discount products, sold through branches, brokers and its direct telephone operation.

John Charcol marketing manager Siobhan Hotten tends to favour Bank of Ireland as a provider. "They've got a tip-top service which is a major consideration because inevitably there are deadlines to be met and we feel we can put a case to Bank of Ireland with confidence," she says.

Ms Hotten also says the bank is good for customers looking for higher loan sizes and the self-employed: "They understand the dynamics and difficulties these people face."
She adds that apart from a redemption-free discount mortgage, A&L's loan range is "pretty mediocre".