Brendan Burgess
Founder
- Messages
- 52,046
An article in the Sunday Times by Niall Brady 11 January. Reproduced with permission.
LAST week's mortgage rate reductions will cost Bank of Ireland (javascript:void(0);) less than €2m a year, compared with an estimated €40m for Allied Irish Banks (AIB), the only lender to have offered cuts to existing borrowers.
With Bank of Ireland , only new customers with a loantovalue (LTV) of less than 80% — about half its new business — will get the lower rates revealed on Monday. In contrast, AIB cut rates on December 1 across the board, which benefited about 146,000 existing customers on variable rates.
Bank of Ireland, Permanent TSB and KBC Bank have been heavily criticised for failing to share the reductions with existingcustomers, who pay some of the most expensive mortgages in the eurozone.
"The impact for Bank of Ireland is potentially very modest," said Eamonn Hughes, a banking analyst at Goodbody Stockbrokers.
The token gesture is unlikely to quell anger s over rates here. Variable rates in Ireland average 4.24%, according to Central Bank governor Patrick Honohan
, compared with a eurozone average of 2.51%.
Householder Niamh Ecevit estimates she would save €14,000 a year if her lender, KBC, had passed on all cuts in wholesale interest rates by the European Central Bank in the past five years. She pays 4.2%interest on a home loan of €270,000 in Dublin and 5.2%on a mortgage of a similar size on a buytolet investment. Rates on similar mortgages in France, where Ecevit has professional experience of the property market, average 2.9%3.15% fixed for the term of the loan.
Ecevit is in negative equity so she cannot move from KBC to take advantage of the cheap deals that other banks are offering for new business.
"Variable mortgage holders are being held prisoner," she said. "They can't move their mortgages because other lenders aren't interested while they're in negative equity.
Many are struggling because the interest they're being charged is too high."
Ecevit fears what will happen when interest rates begin to rise. "Banks will make sure to pass on the increases but not the decreases — they are keeping our money to make up for the losses they made. This is not our problem and it shouldn't be our burden."
LAST week's mortgage rate reductions will cost Bank of Ireland (javascript:void(0);) less than €2m a year, compared with an estimated €40m for Allied Irish Banks (AIB), the only lender to have offered cuts to existing borrowers.
With Bank of Ireland , only new customers with a loantovalue (LTV) of less than 80% — about half its new business — will get the lower rates revealed on Monday. In contrast, AIB cut rates on December 1 across the board, which benefited about 146,000 existing customers on variable rates.
Bank of Ireland, Permanent TSB and KBC Bank have been heavily criticised for failing to share the reductions with existingcustomers, who pay some of the most expensive mortgages in the eurozone.
"The impact for Bank of Ireland is potentially very modest," said Eamonn Hughes, a banking analyst at Goodbody Stockbrokers.
The token gesture is unlikely to quell anger s over rates here. Variable rates in Ireland average 4.24%, according to Central Bank governor Patrick Honohan
, compared with a eurozone average of 2.51%.
Householder Niamh Ecevit estimates she would save €14,000 a year if her lender, KBC, had passed on all cuts in wholesale interest rates by the European Central Bank in the past five years. She pays 4.2%interest on a home loan of €270,000 in Dublin and 5.2%on a mortgage of a similar size on a buytolet investment. Rates on similar mortgages in France, where Ecevit has professional experience of the property market, average 2.9%3.15% fixed for the term of the loan.
Ecevit is in negative equity so she cannot move from KBC to take advantage of the cheap deals that other banks are offering for new business.
"Variable mortgage holders are being held prisoner," she said. "They can't move their mortgages because other lenders aren't interested while they're in negative equity.
Many are struggling because the interest they're being charged is too high."
Ecevit fears what will happen when interest rates begin to rise. "Banks will make sure to pass on the increases but not the decreases — they are keeping our money to make up for the losses they made. This is not our problem and it shouldn't be our burden."
