An Post to offer mortgages 1% below current rates

Messages
4,911
More on An Post selling mortgages in todays SIndo. (Article not online yet, it will probably be later, it can be viewed via PressReader).

Rates to be 1pc lower than banks Switchers and first-timers boost Savings of €47k on €250k loan
THE biggest shake-up of the mortgage market for almost 20 years is on the way with An Post set to offer home-loans and pledging it will undercut current market rates by 1pc.

The mortgages will be available to both new customers and, crucially, switchers seeking a move from their existing mortgage provider to cut their monthly payments.
An Post plans to issue a document setting out its requirements, known as a Request for Proposals, for mortgages in December. “We would look to do a joint venture with a partner using their capability,” said Ms Byrne.
An Post is confident a partner can be selected by late Spring next year. “We will cast the net abroad. Irish banks are also welcome to submit proposals but we have also looked at international banks that hold licences here,” she said.

“We aim to be in the marketing and piloting phase towards the end of next year.”
 

Zenith63

Frequent Poster
Messages
637
It feels a little bizarre An Post operating like a regular business, trying to break into new areas like this, being a mobile phone provider etc? If they make mistakes with the mortgages and go bankrupt (appreciate this would not be let happen, but just for the sake of discussion) do we just stop having a postal service in Ireland, which is really what they’re there to deliver - a public service?

To take a slightly absurd extension of this, if the HSE decided to start offering a mortgage offering to help them cover their costs would it make sense. I know they’re not a business in the same way An Post are, but they are both government entities presumably setup with the sole purpose of delivering their assigned services.
 
Messages
4,911
If they make mistakes with the mortgages and go bankrupt (appreciate this would not be let happen, but just for the sake of discussion) do we just stop having a postal service in Ireland
It seems that An Post want to sell mortgages via a joint venture that would have segregated liability. If the joint venture fails, An Post would be unaffected.
 

RETIRED2017

Frequent Poster
Messages
760
I don't agree that it is bizarre , For the last year or two the main banks have being swiping the best customers off one another the so called switchers good customers who always paid there mortgage when due over the past 10 years ,

it was only a matter of time before some bank got in on the action ,An post network would be very attractive to a bank wanting to get some of this business

I expect the Irish banks from now on will be offering very good rates to people who are prepares to fix for at least 10 years or more,

Irish banks long term will be left with the low trackers taken out in the past and not be able to offset them against the people not on trackers,
 

Zenith63

Frequent Poster
Messages
637
To be clear, I’m not commenting on whether it’s a good business area or not. I’m wondering whether it makes sense for the government organisation charged with getting letters and parcels from A to B going in search of profitable enterprise, as if they are a private sector business.

To take a slightly less hyperbolic example, would nobody question the rationale of Irish Water beginning to sell phones and offer mortgages?
 

RedOnion

Frequent Poster
Messages
4,594
I’m wondering whether it makes sense for the government organisation charged with getting letters and parcels from A to B going in search of profitable enterprise, as if they are a private sector business.
Absolutely it does. It's not like this is a first venture outside letter delivery...
They ran the National Lottery for years. And collect TV licence fees. And pay out pension and social welfare payments. And collect bill payments. And operate the Prize Bonds. And run Post Insurance. And state savings. And all those other things that keep it afloat, while they make a loss delivering letters and keeping post offices open.

Don't forget they tried a banking JV before, although the timing was terrible - PostBank.

I'm not sure if the idea works here. The Post Office in UK has a hugely successful partnership with BoI, including offering mortgages.

I'm sure An Post would be aiming for a similar model here, where they use their distribution system to sell somebody else's mortgage products. But how strong in the An Post brand here in their target market? Is it really a benefit to a foreign bank hoping to offer mortgages? Over and above what a broker network, or competitive pricing could bring?
 

Brendan Burgess

Founder
Messages
41,819
Absolutely it does. It's not like this is a first venture outside letter delivery...
They ran the National Lottery for years. And collect TV licence fees. And pay out pension and social welfare payments. And collect bill payments. And operate the Prize Bonds. And run Post Insurance. And state savings. And all those other things that keep it afloat, while they make a loss delivering letters and keeping post offices open.
Hi Red

Not sure if you are being ironic there?

The state should not be involved in providing mortgages. Can you imagine the uproar if An Post dares to try to repossess a house where the borrower chooses not to pay?

Obviously, I would welcome any new entrant into the market, but I doubt if it will be An Post.

If delivering letters and keeping post offices open are not sustainable, we should face up that fact and deal with it. We should not disguise it by allowing a state company to enter into a business area where they have no role.

Brendan
 

Zenith63

Frequent Poster
Messages
637
Absolutely it does. It's not like this is a first venture outside letter delivery...
They ran the National Lottery for years. And collect TV licence fees. And pay out pension and social welfare payments. And collect bill payments. And operate the Prize Bonds. And run Post Insurance. And state savings. And all those other things that keep it afloat, while they make a loss delivering letters and keeping post offices open.

Don't forget they tried a banking JV before, although the timing was terrible - PostBank.

I'm not sure if the idea works here. The Post Office in UK has a hugely successful partnership with BoI, including offering mortgages.

I'm sure An Post would be aiming for a similar model here, where they use their distribution system to sell somebody else's mortgage products. But how strong in the An Post brand here in their target market? Is it really a benefit to a foreign bank hoping to offer mortgages? Over and above what a broker network, or competitive pricing could bring?
I don't think their having run these enterprises in the past in any way validates them adding more? Also for many on your list - TV licence collections, prize bonds, state savings, distributing pensions/welfare payments - they are just additional government services, so sure, if An Post have shop fronts in every town this makes sense. There's a fair bit of distance between collecting TV licence fees and operating a mobile phone network or being a mortgage provider though surely?

Again if Irish Water, who I think are probably a similar entity to An Post, were to get into providing mobile phones or mortgages would nobody blink an eye? Most people would think this bizarre no?
 

Jim2007

Frequent Poster
Messages
2,160
It seems that An Post want to sell mortgages via a joint venture that would have segregated liability. If the joint venture fails, An Post would be unaffected.
On the contrary no matter what the legal status is, if this fails An Post can not walk away. An Post is late to the party and will end up picking up a large block of subprime lending, so if this goes wrong, the taxpayer will end up on the hook once again.
 

Brendan Burgess

Founder
Messages
41,819
On the contrary no matter what the legal status is, if this fails An Post can not walk away.
Hi Jim

If An Post were taking deposits or writing insurance, I would agree with you. The reality is that the depositors or insured would be bailed out.

But if the mortgages default and it causes a loss to some German or Spanish bank who provided the capital, I doubt if they would be bailed out. We didn't bail out KBC or Ulster Bank because Irish depositors were not at risk.

Brendan
 

Gordon Gekko

Frequent Poster
Messages
4,563
It’s quite astute from An Post if true. At those rates though, I can’t see this being a product for the man in the street. It sounds more like it will be aimed at the “super-prime” market, i.e. LTVs in the sub-80% bracket with strong incomes.
 

RedOnion

Frequent Poster
Messages
4,594
Not sure if you are being ironic there?
Yes and no.

If we're serious for a minute, An Post are never going to be the one behind the mortgage. They've no money, no banking licence, no underwriting experience... Basically none of the things needed to set up a mortgage business.

An Post do have an asset, in that they have a distribution network, and a very well known and trusted brand. I see nothing wrong with getting value from that, so long as it doesn't expose the tax payer to losses. I don't think the government should be in the mortgage business.

All they'll be doing is marketing some banks product. Which means I'd take the suggested pricing with a grain of salt. They haven't even got a banking partner yet, so they've no idea what rate they'll actually be able to price mortgages at.

And if it does take off, 'An Post' won't be repossessing houses - it'll be whatever bank they partner up with.

If we want to keep a network of post offices open, they need to offer services beyond what they have in the past. This model works in other countries, why not here?
 

Brendan Burgess

Founder
Messages
41,819
And if it does take off, 'An Post' won't be repossessing houses - it'll be whatever bank they partner up with.
That might well be the legal position, but the media would report "An Post repossesses house from sick mother with autistic child.".

If we want to keep a network of post offices open,
If ... I don't think that we should keep such an extensive network. If we do want to keep a post office in every village, then let the taxpayer subsidise it directly.

Brendan
 

JohnJay

Frequent Poster
Messages
898
I dont see what advantage it will be for An Post to have its "network" to provide a mortgage business. Its not as if people will pick up a mortgage off the shelf when they go to buy a stamp. If any new bank comes in to the market with competitive rates, then they will get business. Most people will research the market when looking for a mortgage and pick the best option for them. They wont pick An Post's product just because there is a post office down the road!
 

shweeney

Frequent Poster
Messages
285
"1% below current rates" is suitably vague - which current rates? Ulster bank have a 2.3% fixed rate, will An Post be offering 1.3%? It seems unlikely.

They previously said they were going to shake up the current account market, but the product they actually introduced is pretty meh.
 

Protocol

Frequent Poster
Messages
3,175
"1% below current rates" is suitably vague - which current rates? Ulster bank have a 2.3% fixed rate, will An Post be offering 1.3%? It seems unlikely.
Correct, not a hope of 1.3% fixed.

Maybe 1% below the 3.5 - 4.5% rates.
 

WorstPigeon

Frequent Poster
Messages
89
I can’t imagine that they’d be undercutting Ulster Bank, but they may not need to. Given a choice between a 2.3% rate from UB or An Post, I think a lot of people would go for An Post; it’s a very good brand.
 

newirishman

Frequent Poster
Messages
805
Reminds me a bit about the noise and discussion from "Frank Mortgages". They made some announcements as well which went exactly nowhere.
I wouldn't be surprised if an post start offering mortgages, I would just be surprised if their offer will be of any relevance compared to what's already in the market.
There is in my opinion a close to zero chance of a sub-2% rate in the Irish market, and even if it would happen, it would only be for a very small subset of mortgages.
 
Top