Charlie Weston: "Central Bank wants UB to waive break fees on fixed rate mortgages"

[Brendan Burgess]

Regulator wants Ulster customers to be spared fees in scramble to switch

Borrowers should not be charged thousands of euros to exit Ulster Bank mortgages after the bank’s decision to quit the market, regulators believe.

m.independent.ie

However, the Irish Independent understands from senior sources that the Central Bank believes levying fees and charges on customers is not appropriate because it is the bank which wants out of the relationship with borrowers.

Homeowners who opt to leave a fixed-term Ulster Bank mortgage to go to a new lender are potentially liable for thousands of euros in fees – which can be equal to six months’ interest.

....

Regulators believe that as NatWest took the decision to leave the market and end the customer relationship the bank should waive all charges.

It is understood Central Bank regulators intend to monitor such charges and consumer protection issues including transparency about its plans closely as Ulster Bank begins to wind down.

 

[Brendan Burgess]

I was wondering about this.

If I have just fixed for 7 years at a good rate and my mortgage is switched to permanent tsb, then it probably doesn't matter that much that my mortgage has gone to ptsb. I will be vulnerable to ptsb's exploitation of existing customers after 7 years, but they might have changed by then.

If I have fixed for 2 years, by the time my mortgage is sold, it probably won't matter.

Variable rate mortgage holders are more vulnerable as they might go to a lender they don't like and will have to pay €1,500 or so to switch.

Brendan

 

[bish123]

That's good news if implemented.
I am in this boat. Only a year ago, fixed at 2.5% with Ulster bank for five years. I am eligible for AIB green rate of 2.35% and switcher cash back offer of €2000 but Ulster bank is asking almost €3000 as break up fee. Never missed any installment but like to be in control instead of waiting and wondering.

 

[Gordon Gekko]

Me too. I have two years left on a 2.5% rate. Before the news about UB, I would have happily stayed with them forever based on their competitive rates and the flexibility around overpayments. Now I need to think about it.

 

[skrooge]

To play devils advocate, UB and the customer (me) entered into a fixed rate mortgage contract for X percent for Y years. After which the prevailing variable rate will apply (with the potential for fixed rates to be on offer). As an Ulster Bank mortgage customer I see them holding up their side of the contract so I should honour my side as well. If I really want to move I can, it'll cost me in terms of a break fee but the option is there regardless.

Great if they wave it. Means I move 18 months sooner than I planned. I imagine inertia well mean most won't take advantage of it. Probably won't do any NatWest any favours in terms of maximising the sales price.

I don't see any benefit for the country by the regulator leaning on them in this way. It only further alienates banks from operating in Ireland.