Fixed or MVR when LTV >90%

elirus

Registered User
Messages
9
Hi,
Looking for some advice on mortgage/mortgage rate please
We're (stuck) with Ptsb and paying 4.5% variable rate. Currently in negative equity of approx 10% of the remaining mortgage, so unfortunately we're stuck with them for the foreseeable future.

They've sent us a letter offering fixed rates for either 2 or 3 years for 4.2% or 5 years for 4.3%, and I also see on their website that they have an option to switch to a Managed Variable rate of 4.3%.

I'll admit, I'm really clueless about it all, and really don't know what the best option here is. Would appreciate any advice, thanks in advance.
 

elirus

Registered User
Messages
9
I haven't. But there have been a few of the same house type for sale recently, all around the same price. I know mine might not be exactly the same, but the value won't be far off, and unfortunately, we've a few years to go before we're out of negative equity.
 

RedOnion

Frequent Poster
Messages
4,540
I've been thinking about this as I'm unsure if there's a 'right' answer.

Firstly, the bad news is even if you're out of negative equity, you'll be stuck with PTSB until you get below 90% LTV before you can switch. I'd be looking at value if house, and if there's anyway you could trim costs elsewhere for a year to try pat extra off Mortgage to switch to another lender. That might not be possible.

Now, which option is best right now?

You can switch to MVR immediately, and later at any point switch to the fixed rates then available. That's what I would do, but keep it under review. You immediately benefit from 0.2% reduction, and could benefit if PTSB make any reductions in their variable rates.

Normally I'd recommend to fix, but PTSB is so out of line with the market that I would hope they come under political pressure to do something this year. This should speed up if they sell off their non performing buy to let loans as it will make their wholesale funding cheaper.
 

elirus

Registered User
Messages
9
Thanks for your help. I knew PTSB's fixed rates weren't great compared to others, but the reason I was considering it was because I'd worry that the variable rate will go up. If everything stayed the same (mortgage repayment per month and house price), then we should be under the 90% LTV in about 6yrs. I will definitely look in more detail into the MVR option now though. Thanks again, I appreciate your response.
 

RedOnion

Frequent Poster
Messages
4,540
PTSB actually managed to increase their market share of new lending last year, but the commentary I've seen this week from analysts is they expect them to come under increased pressure to reduce rates. There's an expectation that BoI might re-enter the broker market, which is a key market for PTSB (c. 40% of their business comes from brokers), so they will have to reduce rates at least for new customers if that even becomes a rumour!

Keep an eye on rates, and hopefully within 6 months we'll see a reduction from PTSB on their fixed rates. No guarantee though.
 

RedOnion

Frequent Poster
Messages
4,540
There's an expectation that BoI might re-enter the broker market, which is a key market for PTSB (c. 40% of their business comes from brokers),
As expected, BoI have announced their intention to re-enter the broker market this morning.
Hopefully this will start to put pressure on PTSB rates.
 

elirus

Registered User
Messages
9
As expected, BoI have announced their intention to re-enter the broker market this morning.
Hopefully this will start to put pressure on PTSB rates.
Again, a disclaimer, I'm really not clued in on these matters, so I don't really know what that means in terms of PTSB rates in the near future. I do appreciate your replies though, thank you.

We got the application pack from PTSB for the MVR and had the house valued this week, and the house value is within a couple of hundred euro of the remaining mortgage amount at present, so hopefully within a couple of years we'll be under the 90% and in a position to switch lenders.

So at this point I'm none the wiser of what to do with the next 3-4 years in mind. Currently on 4.5% and MVR would reduce it to 4.3, but Ts and C's state that we would not be able to switch back to the SVR at any stage, so my concern is that after we're locked in, they'd reduce the SVR but not the MVR. The 2 and 3yr fixed rates are currently at 4.2%, which right at this moment seem tempting, as there wouldn't be any uncertainty for the duration, but obviously I have no idea what will happen a few months or a year down the line and we could end up paying a lot more than we would have on the SVR or MVR.

It's all just so confusing :(
 

RedOnion

Frequent Poster
Messages
4,540
Ah, I see your confusion.
Technically, you are correct. There's nothing to stop them reducing their SVR rate.

But let's be honest - it's theoretical.

The language used by Jerry Masding in justifying their high SVR in Finance committee discussions would lead to massive backlash if they were ever to do that.

If I were in your shoes, I'd search to the MVR immediately.

Longer term I would hope today's announcement by BOI would lead to a rethink of PTSB interest rates, as brokers should stop recommending PTSB in a number of scenarios, particularly on the basis of the rates for existing customers once initial fixed period ends.

http://oireachtasdebates.oireachtas.ie/debates authoring/debateswebpack.nsf/committeetakes/FPJ2016112200002
 

renter45

Frequent Poster
Messages
106
As expected, BoI have announced their intention to re-enter the broker market this morning.
Hopefully this will start to put pressure on PTSB rates.
Whats the difference for the punter applying directly to BOI or going through a broker? Will they have offer different rates??
 

RedOnion

Frequent Poster
Messages
4,540
Whats the difference for the punter applying directly to BOI or going through a broker? Will they have offer different rates??
For a punter, shouldn't make a difference, unless they reduce the cash back to offset broker commission. There are a surprising number of people who only go to a broker rather than applying directly to the bank.

We'll know for sure when BoI actually get into the market.
 
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