Brendan Burgess
Founder
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- 52,184
They don't.
If you are a long-term customer of Bank of Ireland you are stuck on a SVR of 4.5%.
If you are at less than 80% LTV and tell them you are moving to KBC, they will reduce the rate for you.
However, if you are in Negative Equity or Arrears, they know that you can't move and they will not cut it for you.
So, to pay less than the 4.5% rate, you have to fix the mortgage rate.
So, you fix for one year at the following rates:
After the one year fix is up, you roll on to their variable rate. If you are on over 80% LTV, you will be back paying 4.5%!
If you have been in arrears but have an LTV of less than 60%, it might be worth fixing for one year, and then availing of the lower variable rate.
The 2% cash back allows Bank of Ireland to keep rates high for existing customers
Bank of Ireland charges 3.9% for <60% LTV, whereas Ulster Bank charges 3.5% or 3.35%. The only reason anyone would take out a new loan with BoI is because of the 2% cash back.
It makes no sense to borrow from Bank of Ireland (or permanent tsb) on the assumption that you will shop around after 5 years. Firstly, most people don't actually bother to shop around. Secondly, many people will have had a change in circumstances which means that they can't shop around. So you will be stuck with the most expensive lender.
It's impossible to know in advance which lender will be the cheapest over the longer term. But AIB and Ulster Bank pass on the same rate cuts to new and existing customers. They don't keep their rates artificially high and attract new customers through a 2% cash back bribe. And Ulster Bank will reduce your rate if your LTV falls. KBC shamelessly exploits existing customers knowing that most of them won't move. BoI and ptsb trick the market with their 2% cash back.
While it's impossible to predict the future behaviour, it's likely that AIB and Ulster Bank will be the best long term value.
If you are a long-term customer of Bank of Ireland you are stuck on a SVR of 4.5%.
If you are at less than 80% LTV and tell them you are moving to KBC, they will reduce the rate for you.
However, if you are in Negative Equity or Arrears, they know that you can't move and they will not cut it for you.
So, to pay less than the 4.5% rate, you have to fix the mortgage rate.
So, you fix for one year at the following rates:
After the one year fix is up, you roll on to their variable rate. If you are on over 80% LTV, you will be back paying 4.5%!
If you have been in arrears but have an LTV of less than 60%, it might be worth fixing for one year, and then availing of the lower variable rate.
The 2% cash back allows Bank of Ireland to keep rates high for existing customers
Bank of Ireland charges 3.9% for <60% LTV, whereas Ulster Bank charges 3.5% or 3.35%. The only reason anyone would take out a new loan with BoI is because of the 2% cash back.
It makes no sense to borrow from Bank of Ireland (or permanent tsb) on the assumption that you will shop around after 5 years. Firstly, most people don't actually bother to shop around. Secondly, many people will have had a change in circumstances which means that they can't shop around. So you will be stuck with the most expensive lender.
It's impossible to know in advance which lender will be the cheapest over the longer term. But AIB and Ulster Bank pass on the same rate cuts to new and existing customers. They don't keep their rates artificially high and attract new customers through a 2% cash back bribe. And Ulster Bank will reduce your rate if your LTV falls. KBC shamelessly exploits existing customers knowing that most of them won't move. BoI and ptsb trick the market with their 2% cash back.
While it's impossible to predict the future behaviour, it's likely that AIB and Ulster Bank will be the best long term value.