Protest against Bank Standard Variable Mortgage Rates.

El chapucero

Fair play to Sarah Hogan today at the permanent TSB AGM.

We have an AIB SVR mortgage and each month the credit card balance increases as we cannot make ends meet.
It is sickening to hear the Government blowing about how good the economy is going when we are struggling on our reduced income trying to keep our house -after 30 years working.

I spent the last 8 years working 60+ hours/week in the private sector on reduced income to keep our house and survive only to be gouged today by the Government's Bank.

The same Government seem happy to do nothing to help the citizens with SVR mortgages and for a minute last week I thought Enda Kenny was going to do something to help.

Besides emailing politicians is there anywhere to protest about this ?

We are one of the 320,000 SVR mortgages but there are 4 adults in this house(all living off this one income) - 4 possible votes.

I looks like the only way to get something done in this country is to take the same type of action as the water protesters.

Tow

Look at it this way. You could have switched your Standard Rate for a Tracker at any stage during the Boom/Tracker years for the cost of writing a letter sticking a stamp on it. Even during the boom years with low Standard Rate mortgages you would have saved a decent amount of money each month with a Tracker.

This is not something I am making up, I moved to ECB + .8% with AIB in 2004/5. When they started to offer ECB + .6% a couple of years later, I wrote them again requesting it and they moved me to the lower rate. From memory you needed a 50% loan to value to get .6%, but things were flying back then and they did not bother getting the house revalued. I just got an acknowledgement letter of the change a week or so after my request.

El chapucero

A lot of people could have done a lot of things in the past- the question now is what can we do now to try and get some fair treatment ?
If the ECB eventually starts to creep up will the banks maintain their current margins and drive us to insolvency ?

nok2008

El chapucero wrote: »

A lot of people could have done a lot of things in the past- the question now is what can we do now to try and get some fair treatment ?
If the ECB eventually starts to creep up will the banks maintain their current margins and drive us to insolvency ?

People have had no option over the last 5 or so years but to take out SVR.
More than likely people on trackers also got the additional 7 years mortgage interest relief. Once u start doing the maths the total lifetime repayments for a house bought during the boom on a tracker versus versus a house bought for a lot less during the crash could actually be quite similar.

jathclare

Tow wrote: »

Look at it this way. You could have switched your Standard Rate for a Tracker at any stage during the Boom/Tracker years for the cost of writing a letter sticking a stamp on it. Even during the boom years with low Standard Rate mortgages you would have saved a decent amount of money each month with a Tracker.

This is not something I am making up, I moved to ECB + .8% with AIB in 2004/5. When they started to offer ECB + .6% a couple of years later, I wrote them again requesting it and they moved me to the lower rate. From memory you needed a 50% loan to value to get .6%, but things were flying back then and they did not bother getting the house revalued. I just got an acknowledgement letter of the change a week or so after my request.

This is irrelevant, people on trackers are lucky and should quit the financial guru act.

Nobody, especially the banks and their economists foresaw a sustained unprecedented in history, low period of interest rates. Let alone Johnny Mortgage holder.

Trackers have not been offered since 2009. What's the answer to anyone who has taken a mortgage since then? Suck it up and keep subsidising trackers?

Prior to 2009, a lot of mortgage holders prudently took fixed rates to ensure a certain level of repayment. Many of these would not have had the option to take trackers before rates fell.

Furthermore, until late in 2009 most trackers would have been more expensive than fixed and variable rates as the base rate moved from 2% to 4% very quickly before it collapsed.

SVR holders have legal right, and the moral justification to protest these disgraceful rates.

nok2008

jathclare wrote: »

This is irrelevant, people on trackers are lucky and should quit the financial guru act.

Nobody, especially the banks and their economists foresaw a sustained unprecedented in history, low period of interest rates. Let alone Johnny Mortgage holder.

Trackers have not been offered since 2009. What's the answer to anyone who has taken a mortgage since then? Suck it up and keep subsidising trackers?

Prior to 2009, a lot of mortgage holders prudently took fixed rates to ensure a certain level of repayment. Many of these would not have had the option to take trackers before rates fell.

Furthermore, until late in 2009 most trackers would have been more expensive than fixed and variable rates as the base rate moved from 2% to 4% very quickly before it collapsed.

SVR holders have legal right, and the moral justification to protest these disgraceful rates.

Whilst I do agree that rates are too high and suffer from it myself we all know who own the banks in this country and no way is our great government going to decrease the profits or not so great losses of the banks they/we hold shares in. Remember we also got to keep the ecb / germans happy also!!!

Tow

jathclare wrote: »

Trackers have not been offered since 2009. What's the answer to anyone who has taken a mortgage since then? Suck it up and keep subsidising trackers?

Post 2009 mortgages benefited from lower house prices. As nok2008 rightly pointed out, on average, the cost of a buying a home on during the tiger years with a tracker mortgage and buying a home in the downturn with a standard rate mortgage is currently working out much the same. The real losers are those who bought at the height and for whatever reason at this point in time don't have a tracker.

What is frightening is that the current standard mortgage rates from AIB etc, while high compared to trackers are not historically high by any means.

jathclare

Tow wrote: »

Post 2009 mortgages benefited from lower house prices. As nok2008 rightly pointed out, on average, the cost of a buying a home on during the tiger years with a tracker mortgage and buying a home in the downturn with a standard rate mortgage is currently working out much the same. The real losers are those who bought at the height and for whatever reason at this point in time don't have a tracker.

What is frightening is that the current standard mortgage rates from AIB etc, while high compared to trackers are not historically high by any means.

The repayments are close, the cost is nowhere near the same.

The interest cost on a €200,000 mortgage over 30 years at 4.5% is €164,000.

The interest cost on a €300,000 mortgage over 30 years at 1.5% is €73,000.

Trackers, are practically just paying back principal at this rate. In fact, any tracker holder who can, but is not intentially overpaying their mortgage right now is a fool.

Furthermore, mortgage rates, relative to the base rate, are at historical highs.

All this is irrelevant to the arguement. SVR holders should not have different terms for the same product, nor are terms (300% higher) fair even taking commercial considerations into account.

hfallada

German banks are offering fixed mortgages for 10 years at 1.01%. So when a bank has ECB rate with .8%. They arent losing a huge amount to what German banks are able to make a profit on. Banks here have slashed saving interest rates in the last 6 months and can't be losing too much on trackers

Boskowski

In fairness one mortgage and 4 adults living of s single income would be a problem anyway in most cases.

nok2008

jathclare wrote: »

The repayments are close, the cost is nowhere near the same.

The interest cost on a €200,000 mortgage over 30 years at 4.5% is €164,000.

The interest cost on a €300,000 mortgage over 30 years at 1.5% is €73,000.

Trackers, are practically just paying back principal at this rate. In fact, any tracker holder who can, but is not intentially overpaying their mortgage right now is a fool.

Furthermore, mortgage rates, relative to the base rate, are at historical highs.

All this is irrelevant to the arguement. SVR holders should not have different terms for the same product, nor are terms (300% higher) fair even taking commercial considerations into account.

Also you have to account for roughly 14k extra mortgage interest relief and if first time buyers also stamp duty was 0%. We all signed whatever docs stating the rate was variable and we know the risks attached to that. When I took out mortgage I calculated that the variable interest rate would be requires to be @ 7% for 3/of the 5 years fixed and roughly % r 2 higher in other years. Do we campaign for people on fixed also.

jathclare

nok2008 wrote: »

Also you have to account for roughly 14k extra mortgage interest relief and if first time buyers also stamp duty was 0%. We all signed whatever docs stating the rate was variable and we know the risks attached to that. When I took out mortgage I calculated that the variable interest rate would be requires to be @ 7% for 3/of the 5 years fixed and roughly % r 2 higher in other years. Do we campaign for people on fixed also.

Sorry but crediting the extra 14K mortgage interest relief as a good thing is like wishing your child was mentally handicapped so you can claim disability benefit for them.

You cannot expect a variable rate mortgage holder to factor in a risk of the greatest recession in history and the collapse globally of interest rates for a sustained period. Plus you are assuming they had the option to move to a tracker. Fixed account holders would have been moved onto SVRs once the period was up so yes we are compaigning for them.

andrew

In a general way, I think it's worth pointing out the relationship between reposessions and interest rates here. You can't have a country with low interest rates on mortgages and no reposessions; banks need to make some sort of profit to offer loans, and if they can't reposess houses, then they'll charge higher interest rates to make up for that risk.

jathclare

andrew wrote: »

In a general way, I think it's worth pointing out the relationship between reposessions and interest rates here. You can't have a country with low interest rates on mortgages and no reposessions; banks need to make some sort of profit to offer loans, and if they can't reposess houses, then they'll charge higher interest rates to make up for that risk.

The high SVR/Low Reposession relationship comes up again and again. I completely agree that the low reposession rate is a problem and needs to be addressed, particularly BTL strategic defaulters, that sickens me. However, it is not correlated to the high SVR rates and nobody yet has demonstrated that. Sure why have a credit bureau, loan to value criteria, savings history, income limits, deposits etc if everyone was offered a rate that assumed they would default and the bank had no recourse? It doesnt work like that in other countries so why in Ireland.

Banks can make money from FX trading, deposits, invoice discounting, proprietory trading, underwriting, trust, brokering, retail & private banking, clearing and lending. They are profitable again and cost of funds are low. There is absolutely no justification for charging high SVRs.

Sorry OP if I have hijacked your thread.

DulchieLaois

Seriously, rather than writing about it, 350,000 marching in Dublin would scare the bejeepers of any government which would in no doubt put pressure on Banks to slash their rates and profit margains.

andrew

jathclare wrote: »

The high SVR/Low Reposession relationship comes up again and again. I completely agree that the low reposession rate is a problem and needs to be addressed, particularly BTL strategic defaulters, that sickens me. However, it is not correlated to the high SVR rates and nobody yet has demonstrated that. Sure why have a credit bureau, loan to value criteria, savings history, income limits, deposits etc if everyone was offered a rate that assumed they would default and the bank had no recourse? It doesnt work like that in other countries so why in Ireland.

Well, the high rates would be a compliment to the measures you mention, such as savings history etc. For as long as reposessions aren't a thing, banks must cross subsidise, and so it's pretty reasonable to think that that's what they're doing. And while I don't think that link has been formally demonstrated, I really don't think it's far fetched to think that's what's going on. And other countries are very different to Ireland, in particular in many other countries it's not as hard to reposess a house.

Banks can make money from FX trading, deposits, invoice discounting, proprietory trading, underwriting, trust, brokering, retail & private banking, clearing and lending. They are profitable again and cost of funds are low. There is absolutely no justification for charging high SVRs.

Retail banks, make most of their money from loans. Many of the activities you mention there aren't conducted by retail banks, while others make very little money - there's no way those activities could substitute for the kind of money banks make from loans.

Also I think this is relevant for OP (to the extent that it's not thread hijacking), because I think it's important to be careful what you wish for. Say banks reduce their SVR. Perhaps nothing will happen. Or maybe they'll ratchet up reposessions instead. Or, bearing in mind that the taxpayer owns a large portion of some banks, maybe the taxpayer will take the hit in some way instead. In relation to the latter, I don't think it's fair that the taxpayer should pay because some people who now want a tracker mortgage, didn't buy a tracker mortgage.

murphaph

jathclare wrote:

In fact, any tracker holder who can, but is not intentially overpaying their mortgage right now is a fool.

Not necessarily. You can easily beat the tracker rate on deposit in a regular savers account if your margin is low enough. 4% is currently available from Nationwide UK.

nok2008

jathclare wrote: »

Sorry but crediting the extra 14K mortgage interest relief as a good thing is like wishing your child was mentally handicapped so you can claim disability benefit for them.

You cannot expect a variable rate mortgage holder to factor in a risk of the greatest recession in history and the collapse globally of interest rates for a sustained period. Plus you are assuming they had the option to move to a tracker. Fixed account holders would have been moved onto SVRs once the period was up so yes we are compaigning for them.

To be honest your reply may be a bit insulting to some people but I will explain why you have to include the additional mortgage interest relief. All I am pointing out is that in order to compare the 2 different mortgage types you have to calculate your total repayments and therefore you have to include the additional interest relief. To exclude it from.the calculations would just be incorrect.

jathclare

nok2008 wrote: »

To be honest your reply may be a bit insulting to some people but I will explain why you have to include the additional mortgage interest relief. All I am pointing out is that in order to compare the 2 different mortgage types you have to calculate your total repayments and therefore you have to include the additional interest relief. To exclude it from.the calculations would just be incorrect.

Your point is that you are the smart one that got a tracker and that anyone else was an idiot who sleep walked into the high variable rate nightmare. Stop hiding it.

jathclare

murphaph wrote: »

Not necessarily. You can easily beat the tracker rate on deposit in a regular savers account if your margin is low enough. 4% is currently available from Nationwide UK.

So you would rather have a few pence extra on your deposit then take 10 years off your mortgage and inject equity into your house? I have some magic beans to sell you too.

nok2008

jathclare wrote: »

Your point is that you are the smart one that got a tracker and that anyone else was an idiot who sleep walked into the high variable rate nightmare. Stop hiding it.

Nope. No tracker for me. Me have 30 year SVR. Not saying anybody idiot but will say that some people were unlucky with timing and where they bought. Yes the banks and government are ripping us off but I knew that when taking out the mortgage. As bad as the rate is now wait till the ecb ratenstarts increasing. The banks will no doubt the push the rate up even higher than where it is now.
My personal situation was that I could not afford to buy during the boom and bought a few years ago but no tracker option then.

Greyian

jathclare wrote: »

So you would rather have a few pence extra on your deposit then take 10 years off your mortgage and inject equity into your house? I have some magic beans to sell you too.

Let's pretend someone could take out a tracker mortgage right now.

They get one for €100,000 over a term of 30 years, at 1% (starting January 1st, so we can just use calendar year for simplicity).

This means they are paying €321.64 per month.
After 1 year, there remaining balance would be €97,127.18. So they would have equity of €2,872.82.

If they had decided at the very start of their term that they wanted to pay their mortgage off over 20 years instead of 30, they would need to repay €459.89 per month instead, or an extra €138.25. If they did this, there remaining balance on their mortgage would now be €95,460.50, or an increase in equity of €1666.68 at the end of the year.

If, however, they'd continued to pay their mortgage off over 30 years, they could have put the extra €138.25/month into a savings account.
Let's say they put it into a Nationwide 4% savings account (so 2.36% after DIRT). After 12 months, they would have €1659.00 in the account through deposits, plus €21.36 in interest. That would give them a total balance of €1680.36.

As it should now be clear to see, they are financially better off by not paying any extra off their tracker mortgage.



Just to show the effect over 20 years.
If you paid the extra monthly, your balance at the end of the 20 years would obviously be €0 on the mortgage.

If you didn't pay the extra, you'd still have an outstanding balance of €36,718.54 on your mortgage.
Meanwhile though, you'd have been putting €138.25 into your savings account monthly. After 20 years, your total amount in that account would now be €42,433.79.
This means you could pay off the remainder of your mortgage with a lump sum, and have €5,715.25 left over to spend on...well, whatever you want.

With tracker mortgage rates currently being so low, and (some) savings accounts offering far higher interest rates on deposits, it is financially prudent not to overpay your tracker, but instead save the extra amount in a high-yield deposit account.

OldNotWIse

We are on a tracker and I consider myself lucky, not smart. Got in just at the end. It's coming in at under 700. AFAIR it was over 1000 before. I feel sorry for people who are crippled with higher repayments and are being offered no reprive by our idiot government...

murphaph

@Greyian, thx for explaining that to her and saving me from the effort.

We're even luckier than that: We have just signed for a mortgage @ 1.46% fixed for 17 years (the lifetime of the whole loan) and we can save DIRT free (as non-residents) and get the full 3.5% from KBC (Nationwide won't open accounts for residents outside the RoI) and so obviously we pay the bare minimum off the loan here in Germany and save the "difference" in a couple of KBC accounts yielding over 2% more.

The German tax man is more generous than Revenue. You may earn up to €804 a year in interest tax free, a couple obviously double that and children can have accounts too ;-) All in all it's possible to have a considerable amount on deposit and be paying no tax on the interest here.

So, I won't be needing the magic beans from jathclare after all lol.

El chapucero

Certainly looks good in Germany - but some of us have to stay here and make the best of it.
For sure those with trackers are doing well here and good luck to them. As far as I can remember the AIB SVR rate was lower than the ECB rate for a while around 2007/2008. Back around then I believed that the house would appreciate in value by a few per cent annually and for sure never expected the disaster that was to follow in pay cuts ,extra taxes ,50% fall in property values etc. The only thing that did not drop was the mortgage payment- it went the other way ! A lot depends on each family's individual circumstances and what stage they are at : we had been saving like hell since 1994 for third level for our two who are there now with no grants and I had hoped to be able to cover the four years for both of them but all the extra costs of the last few years have left this a good bit short. And then when they are free in the Summer and try to get Summer jobs it is almost impossible ,unless they go abroad, as most of the casual jobs are gone to interns.
So everywhere we turn we meet a new obstacle.
I asked the bank a few times to cut me some slack with the interest rate but I probably would have been better off asking the cat because the answer of "we are sorry but...." is all I got from them.
Last night I saw Brendan Burgess on prime time repeatedly correct the other financial person who was implying that the Banks were not really making much profit from these mortgages etc. So it really seems that they are not going to do anything for SVR customers until they are forced. The Government are doing nothing and the Central Bank Governor will hardly will do much either so unless there is a big protest or another bank comes on the scene we are stuck in this distorted "free" market of high rates.
The bail out cost of these banks was a burden for all citizens of the state but it seems that the job was only half done because they did nothing about the tracker mortgages on the banks books : they left that for the SVR mortgage holders to cover.
It appears like the Government and the banks are all nice and comfortable together and we are the ones that they are shafting.

I wonder where are the rest of the 320,000 SVR mortgage holders ?

When I do the calculations of the the cost of the mortgage /life insurance etc then as far as I can see we would be better off not working and taking all the benefits and we would have plenty of free time to complain and protest to extract the maximum from the system instead of this so called honest way of hard work to earn a living. Actually we might even get a medical card and be able to go to the Doctor when we are sick instead of holding out and weighing the cost of the €50 plus medicines against the next weeks necessities.

Greyian

El chapucero wrote: »

For sure those with trackers are doing well here and good luck to them. As far as I can remember the AIB SVR rate was lower than the ECB rate for a while around 2007/2008. ... The only thing that did not drop was the mortgage payment- it went the other way !

So the variable rate was lower than the tracker rate at that point. Where you requesting that the bank raise your interest rate to match the tracker rate, or where you happy to sit quietly and enjoy your better position (versus tracker holders) at the time?

Also, mortgage rates have gone down since 2008:
History of Irish Mortgage Rates
Bank of Ireland - Start of 2008

Most of the complaints about the SVR rate really seems to based on people being unhappy to be paying more for the tracker, when the same people were more than happy to take the lower variable rate at the time of drawdown.


And the reason for Ireland having higher mortgage rates than Germany (which is the most commonly cited European country to compare us again) is simple. In Germany, if you don't pay your mortgage, you lose your house. Here, if you don't pay your mortgage, you don't lose your house.

murphaph

It should also be noted that the same "problem" exists here in Germany. Lots of people pay all sorts of different rates based on when and in what circumstances they took out their loans.

El chapucero

Is there any chance that you could send one of those German banks over here to offer us a fair deal ? They would still make a good few pound and we could abandon the Government bank and let them sort their out their own problems.

Something in the same spirit as Lidl and Aldi where we now buy everything.

NIMAN

As someone who is on a SVR mortgage, the thing that I immediately thought about all this current argument and that lady who I saw on PrimeTime (or whatever show it was), was "well when you signed on the dotted line, you agreed to the T&C at that time, tough".

Same goes for myself. I might be paying more than a new customer, but should I be entitled to get their rate? I'd love it of course, but I signed up to a different rate, and my signature says I was happy with it at that time.

Is this just another example of the entitlement culture that seems so ingrained in this country? "They are getting that, and I want it too".

SDHogan

Good morning all

As a next step we will be organising a public meting in the near future and will be inviting the Minister, Government of CB etc. to attend (obviously very unlikely that either will).
Please visit facebook.com/svrmortgagecampaign to keep up to date on progress and plans. I am meeting Junior Minister Simon Harris tomorrow to discuss the governments response to our campaign.
300,00 mortgage holders and their family and friends are a powerful pre-election lobby group.
Many of us voted in the present government.

Clearly a variable rate is by definition variable, and that is the contract that we signed in 2009. There are two issues:

1. There are now two different "types" of SVR customer within PTSB (and the other lenders) - new and old. Unacceptable.
2. The huge disparity between the rates that we are charged in Ireland and those charged in other Eurozone countries.

Sara (Hogan)

bluesteel

Hi Sara,

Fair play to you for sticking your head above the parapet so to speak.

A few Facts

• PTSB is a lossmaking bank.
• The main reason for this is high levels of arrears, and lack of repossessions.
• Until banks can repossess properties in arrears no new bank will enter the Irish market.

Do you accept and understand this?

The huge disparity between the rates that we are charged in Ireland and those charged in other Eurozone countries.

can you accept there is a reason for a lack of competition/ new entrant?

It is simply not acceptable for the IMHO/David Hall/Shane Ross/Stephen Donnelly/Gene Kerrigan to wail about high SVRs when they are defending the reasons behind high SVRs - high arrears and lack of repossessions

Those of us paying our mortgages should not be asked to subsidise those who cannot pay and want to stay in their homes. Debt write off should only be for people who surrender their home.