Bad news for Ulster Bank mortgage holders if permanent tsb buys their mortgage

Brendan Burgess

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permanent tsb has treated their existing mortgage customers far worse than any other bank.

They attracted new customers with cash back and moderately competitive mortgage rates but don't allow existing customers to avail of the new rates.

It was only very recently that they allowed existing customers to avail of some products on offer to new customers but still don't allow them access to all products on offer to new customers.

They had by far the highest mortgage rates which required a full scale campaign to highlight them.
 
It added that the preference was to focus on discussions with companies “who can provide customers with full banking services in the Irish market”. The talks with 75 per cent State-owned PTSB centre around mortgages and small business loans and may amount to a material transaction, which could require capital support from the Government, according to sources.

This is crazy. The taxpayer should not be funding this transaction.
 
Here is a comparison of Ulster Bank and permanent tsb rates for existing customers.

permanent tsb exploits the inertia of some customers and the inability to move of some other customers to charge them extortionate rates. They can attract new business only by offering cash back.

Ulster Bank was the first lender to publicly commit to making all products on offer to new customers available to existing customers.
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Astonishing if the State ends up funding any of this. Surely any “Third Force” stuff would fall foul of EU rules? I’m an Ulster Bank mortgage customer on a fixed rate so I’m watching this with interest. Permo have always struck me as particularly low-end.
 
I have issued a press statement just now

Permanent tsb must be blocked from taking over Ulster Bank mortgages

Brendan Burgess, Fair Mortgage Rates Campaign



It has been reported that permanent tsb is the front runner to take over the performing home loans from Ulster Bank. To do this, permanent tsb would require a capital injection from the major shareholder, the state. This must not be allowed to happen.

Ulster Bank has always been a fair lender

· They were the first lender to publicly commit to allowing existing customers to move to the lower rates on offer to new customers.

· They never engaged in cash back which distorts the market

· Until the arrival of Avant, they had the lowest fixed rates on the market

·

By comparison, permanent tsb has a long history of exploitation of existing customers


After the financial crisis, permanent tsb pushed up their Standard Variable Rate to 6.25% when AIB and Bank of Ireland were charging 3% and 3.25% respectively. They only brought rates down after a long concerted campaign by permanent tsb mortgage holders.

· They are the only remaining lender which does not allow existing customers to avail of the rates on offer to new customers

· They keep all their rates high

· The only way that they can attract new customers is through 3% cash back and discounted one year rates. But new permanent tsb customers pay heavily for this over the full term of the mortgage.

The result is that Ulster Bank customers are paying much less than permanent tsb customers

Ulster BankPermanent tsb
2 years2.2% to 2.4%3.1%
3 years2.95%
4 years2.35% to 2.55%
5 years2.2% to 2.55%3%
7 years2.8% to 3.15%3%
10 years2.8% to 3.15%
Home improvementAs above3.95%


Permanent tsb cannot be trusted and the government should not facilitate the development of ptsb.

But aren’t Ulster Bank customers protected for the rest of the fixed rate term?

Yes, they are. Whoever acquires the loan can’t put up the rates until the fixed rate term is up. But at that stage, the customer would be vulnerable to permanent tsb’s exploitative practices.

But can’t Ulster Bank customers switch if they are treated badly by permanent tsb

Some customers can’t switch because their financial circumstances have changed since they drew down the mortgage – e.g. they have had children or they have changed jobs and are still on probation.

As switching costs €1,500 in legal and other fees, it’s often not justified for smaller mortgages.

And even when it is justified, most people are not comfortable with financial issues and are paralysed with inertia as a result.

Other information

I have set up a dedicated forum on Askaboutmoney to help customers of Ulster Bank worried by the withdrawal.

 
It should also be noted that Ulster Bank's facility overpay on an ad-hoc basis allowed many to chop years off the term of their mortgages (and make a substantial interest saving over the term of the mortgage) without having to risk overextending when on a fixed term. It was a significant factor in allowing me to repay my 20 mortgage in less than 13 years.
 
Hi Freelance

Excellent point - I should have put the press release up for discussion here before I issued it. :)


PTSB: No early repayments allowed without checking break fee

Ulster Bank: 10% of the balance at the beginning of the calendar year can be repaid each year without triggering a break fee calculation



Brendan
 
Ulster bank have allowed an overpayment without penalty of 10% of the balance on an annual rolling basis. We are out of fixed rate in Dec and I would aim to refix for two years to keep this ability even if the mortgage moves. I might even request a break fee and see if I can start a new two year one now if the break fee is low or zero.
 
I'd rather my UB mortgage land in PTSB than some 'fund'. I like to be able to walk into a branch and talk to someone directly, if required. If the destination of UB mortgages can be influenced by the relevant powers then I'd rather see a whitelist than a blacklist.
 
It probably won't matter to you one way or the other, as you would be well able to switch.

The only advantage of ptsb over a fund, would be that you could top up the mortgage.

Brendan
 
Another advantage of PTSB (or indeed any bank) over a fund that I am surprised that no one has mentioned on this forum is that the option of further fixing your interest rate is still available. If your Ulster Bank facility transfers to a fund, that option is no longer available, as soon as your fixed rate ends, you cannot avail of any further fixed rate period.

In other words, the options under your loan facility (as originally contracted into) regarding the application of interest to your loan are diminished on the transfer of your mortgage loan to a fund.
 
The Government should seek to get an overseas financial institution to buy the mortgage book.

After that, AIB, KBC or Avant.

Brendan
 
What foreign institution would even look at the Irish morthage Market? There is a reason why foreign lenders left. There is a reason why there are still huge doubts about the future of KBC. Irish mortgages require nearly three times as much capital as mortgages in other countries. Hardly enticing.

Give AIB the ulster bank mortgage book and they along with BOI would have probably over 70% of the mortgage market in this Country which will do nothing for rates. So that's a strange suggestion. Even AIB know that wouldn't be allowed or would they even want them. KBC are not going to commit to that increase in business in this country. Avant are nothing but a niche lender with no stated desire for anything more who could sell their mortgage book at the drop of a hat.

PTSB are not the most competitive lender in the market but there are numerous reasons for that related to their balance sheet, capital structure and cost of capital. It doesn't mean they exploit customers. You might not like cashback offers but they suit some customers and I think at this stage vast majority of people understand it. AAM is full of threads of people taking advantage of them.

I have no idea how a deal like this will allow them to restructure their pricing but I assume it would make them more competitive as their performing loan book would increase dramatically and will change their balance sheet. It should level the playing field and allow them compete properly with the main players in a way that hasn't been possible up to now.
 
I have no idea how a deal like this will allow them to restructure their pricing but I assume it would make them more competitive as their performing loan book would increase dramatically and will change their balance sheet. It should level the playing field and allow them compete properly with the main players in a way that hasn't been possible up to now.
With the government pushing for this and not many other likely outcomes I think that’s the best that can be hoped for.
 
Avant buy their AAA Urban low ltv mortgages, quick way to expand their business?

PTSB buy the rest?

Customers who can't switch/risky customers suffer higher rates in the future...
 
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I have issued a press statement just now

Permanent tsb must be blocked from taking over Ulster Bank mortgages

Brendan Burgess, Fair Mortgage Rates Campaign



It has been reported that permanent tsb is the front runner to take over the performing home loans from Ulster Bank. To do this, permanent tsb would require a capital injection from the major shareholder, the state. This must not be allowed to happen.
I do not see many realistic alternatives to permanent tsb. Avant perhaps if they are interested. AIB and BOI would be problematic as they already dominate.
KBC doubtful and a fund would cause an outcry. Very unlikely another foreign bank wants to enter the market right now with the pandemic and recession on the horizon.


It looks like it makes sense for them to get parts of Ulster - very unlikely the government would block it and might even support it with the hope that permanent tsb overall situation might improve through such a move.

 
Eamon Quinn has picked up on it in the Examiner.


Leading mortgage broker Michael Dowling and Brendan Burgess of the Irish personal finance website Askaboutmoney.com have told the Irish Examiner that watchdogs, the Competition and Consumer Protection Commission, or CCPC, and the Central Bank have key roles to play to outlaw cashback incentives which they say have been used by the banks with the most to benefit from the exit of Ulster Bank to drive up mortgage rates.
...

Yesterday, Mr Burgess said with the Ulster Bank selling its loans, it was time for the authorities to act. "Cashbacks should be banned and they should give the same rates that are available to existing customers as are offered to new customers," he said. "In other words, the banks should be told to compete on mortgage rates," he said.

Mr Dowling, a leading broker, said cashback incentives distort the market in which lenders should be competing on price, "and price is the interest rate that the lenders are charging".
 
Would there be a way for UB customers to "switch" to a PTSB rate and claim cashback whilst avoiding legal fees?

I'd be switching anyway, would be nice to be paid for it!
 
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