PTSB & BOI reduce rates

rasgav

PTSB are reducing variable rates for new business.

BOI are reducing variable rates for new business and fixed rates for all. The fixed rates are extremely attractive.. what does this tell is about the way BOI sees rates going in the short-medium term?

Unfortunately I cannot post links.. perhaps someone else can do a quick google and oblige.

Eldarion

PTSB article:
http://www.independent.ie/business/personal-finance/property-mortgages/permanent-tsb-plans-to-cut-its-mortgage-rates-for-new-buyers-30882068.html

BOI article:
http://www.independent.ie/business/personal-finance/property-mortgages/bank-of-ireland-to-cut-mortgage-rates-for-new-customers-30882706.html

Not as impressive as AIB's cuts but they're in the same vein. They're also extending their "Pay for your stamp duty" gimmick it seems.

seamus

It means that they are likely getting more favourable rates on the markets as sentiment improves in Irish banks, and it's clear that ECB rates are not going up by any significant amount in the next 6-12 months as eurozone inflation bumps along the floor, and won't be back in the 2/3% range for another 2-5 years.

There are other reasons to do this too - fears of a potential dip in the property market would threaten a shaky recovery in the stability of their loan books. So if they can encourage more borrowers in, that can prop up prices. It would also mean that affordability improves to a certain extent, helping offset fears about the ICB rules.

the groutch

it's all about stopping KBC from getting a foothold in the market, and make it less attractive for other foreign banks to join the mortgage market over here.

Chris_5339762

Come on KBC, reduce your rates or I'm outta there.

MarkAnthony

What are people's thoughts about as as interest rates do climb? Will we see the banks piling full increase onto consumers or will be we see some difference between the retail rate and the ECB rate narrow?

seamus

MarkAnthony wrote: »

What are people's thoughts about as as interest rates do climb? Will we see the banks piling full increase onto consumers or will be we see some difference between the retail rate and the ECB rate narrow?

Depends on how competitive the market is at the time tbh. If it's easy for mortgage holders to switch around, then rates will rise tentatively. However if lending is constrained again and people are largely "trapped" with their current provider, then they will happily pile on the increases.

PTSB are offering a 3 year fixed rate under 5% though, which indicates to me that they don't expect to see any significant change in the ECB rates in the next 18 months.

BOI are offering a 10 year fixed of 4.7% versus their standard variable of 4.5%, which is a bit mad. Seems like a bargain...

Eldarion

seamus wrote: »

PTSB are offering a 3 year fixed rate under 5% though, which indicates to me that they don't expect to see any significant change in the ECB rates in the next 18 months.

BOI are offering a 10 year fixed of 4.7% versus their standard variable of 4.5%, which is a bit mad. Seems like a bargain...

If that seems like a bargain... You do know that AIB are offering 5 year fixed at 3.9% and a 3 year fixed at 3.8%? And their standard variable is 3.85% - 4.25%.

All indicators that the banks think interest rates aren't going anywhere in the next few years.

techdiver

As a current PTSB customer, that bloody annoying. I get a mortgage last year and immediately they put the rate up and now are only reducing rate for new customers. :mad:

ionapaul

Chris_5339762 wrote: »

Come on KBC, reduce your rates or I'm outta there.

KBC rates (if you include their current account offer, and you'd be mad to ignore it) are still better though?

http://www.kbc.ie/personal/mortgage/currentoffer

Liking the look of that 3.55% I have to say! 3.69% also great and wouldn't require you to sink so much of your savings into the property.

quadrifoglio verde

Eldarion wrote: »

If that seems like a bargain... You do know that AIB are offering 5 year fixed at 3.9% and a 3 year fixed at 3.8%? And their standard variable is 3.85% - 4.25%.

All indicators that the banks think interest rates aren't going anywhere in the next few years.

They thought property prices were going to keep on rising forever as well.
The thing that I don't like about variable is that the ecb rate can fall and they can still put the interest up.

ted1

MarkAnthony wrote: »

What are people's thoughts about as as interest rates do climb? Will we see the banks piling full increase onto consumers or will be we see some difference between the retail rate and the ECB rate narrow?

If the ECB rate rises there will be room for the variable rate to fall lower. Variable rates are covering losses being made on tracker mortgages. When the bank handed out trackers they forgot to get one for themselves and borrowed at a rate above the current ECB rate

MarkAnthony

ted1 wrote: »

If the ECB rate rises there will be room for the variable rate to fall lower. Variable rates are covering losses being made on tracker mortgages. When the bank handed out trackers they forgot to get one for themselves and borrowed at a rate above the current ECB rate

Please excuse my ignorance here but if the rate rises won't trackers always cost as much to the banks? e.g. they will always only make the (say) 1.2% above the base rate? What's the missing element - it costs them more then the ECB rate to borrow the money lent on trackers?

ted1

MarkAnthony wrote: »

Please excuse my ignorance here but if the rate rises won't trackers always cost as much to the banks? e.g. they will always only make the (say) 1.2% above the base rate? What's the missing element - it costs them more then the ECB rate to borrow the money lent on trackers?

These numbers are fictional, just to illustrate.
The bank borrowed at 2%.
Have a tracker at .5%. So if the ECB is below 1.5% the banks lose and penalise the variable into making up the difference. So above 1.5% and trackers generate an income to the bank.

quadrifoglio verde

MarkAnthony wrote: »

Please excuse my ignorance here but if the rate rises won't trackers always cost as much to the banks? e.g. they will always only make the (say) 1.2% above the base rate? What's the missing element - it costs them more then the ECB rate to borrow the money lent on trackers?

As far as I know the tracker pays a small percentage above the ecb rate but the bank give out the long term loan but have borrowed themselves in the short term.
If I'm wrong someone please correct me

MarkAnthony

Thanks guys; sorry you had to lead me there by the nose but that makes perfect sense. When I borrowed the money it was at X% now it's lower hence the loss. Penny has dropped!

Bateman

ted1 wrote: »

These numbers are fictional, just to illustrate.
The bank borrowed at 2%.
Have a tracker at .5%. So if the ECB is below 1.5% the banks lose and penalise the variable into making up the difference. So above 1.5% and trackers generate an income to the bank.

That's where the competition mentioned above should kick, in particularly on the part of kbc, less exposed (I would have thought - perhaps incorrectly) to trackers than the Irish banks?

Chris_5339762

You can be assured if the ECB rates go up the Variables will too, and probably by 0.25 to 0.5% more.

MarkAnthony

Chris_5339762 wrote: »

You can be assured if the ECB rates go up the Variables will too, and probably by 0.25 to 0.5% more.

Of course but I think the point of this thread is that perhaps the gap will start to narrow somewhat.

techdiver

I received a letter from PTSB yesterday saying my mortgage rate is being reduced, so it looks like they are passing the reduction to all customers, not just new ones.

Eldarion

techdiver wrote: »

I received a letter from PTSB yesterday saying my mortgage rate is being reduced, so it looks like they are passing the reduction to all customers, not just new ones.

It's always nice news to get but do try to remember they are a business. They're not reducing the rates for you out of the goodness of their hearts, they're reducing it because they're worried about the significant noise levels rising in relation to new entrants moving into the Irish market to eat their lunches. They've been charging exorbitant rates well above and beyond what they're borrowing from the ECB at for far too long now.

techdiver

Eldarion wrote: »

It's always nice news to get but do try to remember they are a business. They're not reducing the rates for you out of the goodness of their hearts, they're reducing it because they're worried about the significant noise levels rising in relation to new entrants moving into the Irish market to eat their lunches. They've been charging exorbitant rates well above and beyond what they're borrowing from the ECB at for far too long now.

Don't worry, I'm under no illusion. I fully expect many letters in the opposite direction over the medium to long term. I'll take what I can get for now.

gaius c

ted1 wrote: »

If the ECB rate rises there will be room for the variable rate to fall lower. Variable rates are covering losses being made on tracker mortgages. When the bank handed out trackers they forgot to get one for themselves and borrowed at a rate above the current ECB rate

Honohan mentioned that in passing before xmas and it seems that trackers are just about covering themselves. It's the arrears that the SVR's are covering.

2013Lara

techdiver wrote: »

I received a letter from PTSB yesterday saying my mortgage rate is being reduced, so it looks like they are passing the reduction to all customers, not just new ones.

Got a letter too, delighted. 40 Euro reduction per month. Going to keep paying it in anyway but nice to know well be a small bit ahead of ourselves.

sonandheir

2013Lara wrote: »

Got a letter too, delighted. 40 Euro reduction per month. Going to keep paying it in anyway but nice to know well be a small bit ahead of ourselves.

PTSB dropped my rate as well. However i don't think this is for all customers, I took out my mortgage in the last year with them and am on a MVR as opposed to a SVR (Standard variable Rate). The press release said rates would only drop for new customers and MVR. I think the majority of PTSB customers are on SVR so don't get the discount.

Not sure why they introduced this MVR or how I got it, glad to get the cut in rates though.

TheBody

PTSB issued our mortgage pack to my solicitor before the rate drop but we have not drown down the mortgage yet. Do you think I will qualify for the reduced rate? It's a variable rate mortgage.

sonandheir

TheBody wrote: »

PTSB issued our mortgage pack to my solicitor before the rate drop but we have not drown down the mortgage yet. Do you think I will qualify for the reduced rate? It's a variable rate mortgage.

Check if your variable rate is a 'Managed Variable Rate'. If it is you should qualify for new rates.

TheBody

sonandheir wrote: »

Check if your variable rate is a 'Managed Variable Rate'. If it is you should qualify for new rates.

I just checked there and it is a managed variable rate. Hapy days. Now I just need to vendor to get the finger out but that's a different story!

2013Lara

sonandheir wrote: »

PTSB dropped my rate as well. However i don't think this is for all customers, I took out my mortgage in the last year with them and am on a MVR as opposed to a SVR (Standard variable Rate). The press release said rates would only drop for new customers and MVR. I think the majority of PTSB customers are on SVR so don't get the discount.

Not sure why they introduced this MVR or how I got it, glad to get the cut in rates though.

What's the difference between the SVR and MVR?