Has any AIB SVR customer switched to the lower LTV rate?

I'm in process of changing with them. Just got letter granting permission but only because I've never been on an LTV with them. I've been granted the <=50% of 3.85%. I had to submit a valuation. On the phone I was treated like a major inconvenience for having the audacity to ask. But my petulance has paid off :)
 
Hi nancy

That is very interesting. If you start with an SVR, you can switch to an LTV product.

But if you start with a >80% LTV, you can't switch to a <50% LTV.

It doesn't really make sense to me, but I presume that AIB is simply exploiting inertia.

Anyone who is refused such a switch, should move to KBC.

Brendan
 
It makes no sense. It took them two weeks to satisfy themselves that is never been on an LTV with them. Then a letter was sent confirming I could forward a valuation and it was fairly fast after that.
 
Tried it. No joy. And my LTV has reduced primarily as a result of overpayments, not market values
 
Villaines said:
Tried it. No joy. And my LTV has reduced primarily as a result of overpayments, not market values
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Why don't you switch to another mortgage provider? If AIB don't want your (highly profitable) business, I'm sure another lender would be glad to take you off their hands!
 
Sarenco said:
Why don't you switch to another mortgage provider? If AIB don't want your (highly profitable) business, I'm sure another lender would be glad to take you off their hands!
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It is an option. However, with the AIB rate cut, my contractual >50%,<80% LTV (LTV really is now under 50%)will drop from 4.05% to 3.8% from early June. I need to do some figures to work out how quickly the payback would be but I'm not sure that I really trust KBC enough to move.
 
I'm not really sure why you would have to trust a lender - they're the one giving you the money!

There's a fair difference between 3.8% and 3.55% (the effective KBC variable rate <60% LTV), which depending on the size of your loan could translate into a saving of thousands, if not tens of thousands, of euro over the remaining life of loan. KBC contribute €1,000 towards legal costs and pay your house insurance premiums for a year so the costs of switching would be negligible.

If you're concerned about KBC raising their variable rate in short order, Ulster Bank now offer a three-year fixed rate mortgage (fixed until 31/08/2018) for <60% LTV @ 3.65%, which is fairly attractive, particularly as Ulster Bank will make a payment of €1,500 which should more than cover all switching costs.

Here's an article on the subject that Fiona Reddan wrote in the Irish Times back in February with some further detail:

http://www.irishtimes.com/business/...ring-significant-financial-benefits-1.2114172
 
I wouldn't trust any lenders but some are more incompetent and unscrupulous than others.
I have first hand experience of at least four significant errors on my mortgage account by Ulsterbank, if I hadn't caught them I would have been over charged by a five figure amount over the last 9 years.
Also, don't forget how high PTSB sent their rates in 2008 either, another on the avoid no matter what list.
 
jathclare said:
I wouldn't trust any lenders but some are more incompetent and unscrupulous than others.
I have first hand experience of at least four significant errors on my mortgage account by Ulsterbank, if I hadn't caught them I would have been over charged by a five figure amount over the last 9 years.
Also, don't forget how high PTSB sent their rates in 2008 either, another on the avoid no matter what list.
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To be honest I think our recent history has shown that we really can't trust any financial institutions but I'd have significantly more concerns about institutions with whom that I was placing my money rather than those from whom I was taking money.

I suppose all financial institutions can make administrative errors - innocent or otherwise - although Ulster Bank certainly seem to have a particularly bad reputation in this regard. I think I'd be prepared to keep a close eye on direct debit payments and statements if I felt I was saving myself significant amounts.

I wouldn't be particularly concerned with a sharp rise in a variable rate if I had a <50% LTV mortgage. If that did happen, I would be confident that I could switch to another provider.
 
Sarenco said:
I'm not really sure why you would have to trust a lender - they're the one giving you the money!
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Actually, you should probably avoid lenders who treat their customers worst.

KBC and ptsb introduced rate cuts for new customers only which is a huge black mark against them. I would be slow to take out a mortgage with them unless it was a huge reduction. I certainly would not switch now until I see how the rate cut campaign fares.

BoI introduced rate cuts for new customers only, but will reduce the rates for existing customers if pushed.

AIB reduced rates for new and existing customers but don't allow people switch from one LTV level to another.

UB reduced rates for new and existing customers and allow customers who reduce their LTV benefit from the lower rate.

But a lot of people complain about the UB administration and incompetence which is something you should factor in as well.

I would strongly advise anyone against fixing now - especially for three years - as I would expect fixed rates and variable rates to fall.
 
Brendan Burgess said:
Actually, you should probably avoid lenders who treat their customers worst.

KBC and ptsb introduced rate cuts for new customers only which is a huge black mark against them. I would be slow to take out a mortgage with them unless it was a huge reduction. I certainly would not switch now until I see how the rate cut campaign fares.

BoI introduced rate cuts for new customers only, but will reduce the rates for existing customers if pushed.

AIB reduced rates for new and existing customers but don't allow people switch from one LTV level to another.

UB reduced rates for new and existing customers and allow customers who reduce their LTV benefit from the lower rate.

But a lot of people complain about the UB administration and incompetence which is something you should factor in as well.

I would strongly advise anyone against fixing now - especially for three years - as I would expect fixed rates and variable rates to fall.
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Hi Brendan

I am unclear why you are of the view that any individual borrower should be concerned with the rates charged by their lender to other borrowers? If you switch to an LTV variable rate that ceases to be the lowest rate on the market - well, switch again. The costs of switching are negligible but the medium to long term savings can be very significant.

All lenders are offering reductions on their SVRs to new borrowers (including borrowers refinancing existing home loans) simply because these loans make sense for lenders on a risk-adjusted basis. The borrowers are more credit worthy because they have lower LTVs and/or lower LTIs and therefore can benefit from a lower cost of credit. It was ever thus - contrast the yield on German bonds with the yield on Greek bonds.

I agree that SVR mortgage holders that are not in a position to refinance their loans (due to negative equity or reduced income) warrant some legal protection from usurious rates and I have suggested a methodology in this regard on other threads.

To be frank, I think the Minister's press release last week and the subsequent comments from the banks gives us a good indication of the likelihood that the SVR campaign will have any significant impact. The median interest rate charged by Irish banks on all outstanding mortgages is pretty close to the European median so it's hardly the case that there is a lot of room to reduce mortgage rates overall. Average SVRs may well fall marginally in the coming months but I don't see why anybody would delay switching when they can make significant savings now. If average SVRs do fall, the likelihood is that LTV variable rates will fall in tandem.

I would be inclined to share your view on fixing a mortgage rate at the moment but equally I would be amazed if current average SVRs fell below the lowest fixed rates currently available, even over a three year period. Look at the situation in the mortgage market in the UK - their average SVRs are higher than ours but one-year fixed rates are now available that have, quite literally, never been lower.

I am strongly of the view that the only way that individual borrowers can significantly reduce their borrowing costs is to be proactive and if switching became more commonplace it would inject some much needed competition into our mortgage market, which would benefit us all. Relying on a campaign with laudable objectives but very little, if anything, by way of concrete proposals is unlikely to advance the position of individual borrowers. I don't mean that as a criticism of anybody (and I know many forum users will disagree with me) but I do believe that is the reality of the situation.
 
Sarenco said:
I am unclear why you are of the view that any individual borrower should be concerned with the rates charged by their lender to other borrowers? If you switch to an LTV variable rate that ceases to be the lowest rate on the market - well, switch again. The costs of switching are negligible but the medium to long term savings can be very significant.
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You don't seem to appreciate the hassle and cost of moving and the fact that the future is not certain.

I would prefer to be with a lender which treats all customers fairly. In theory, I can change lender as often as I like, but the deals on offer to cover the switching costs may not be there. My circumstances may change and I may no longer be able to switch. Consider the huge numbers of people who are locked into KBC and ptsb. And people get busy and distracted and don't monitor their mortgage rates continuously.

Of course, if KBC were 1% lower, I probably would recommend switching to them. But if a lender were a bit more expensive but has a record of treating customers fairly, I would probably go to them instead.
 
Sarenco said:
I'm not really sure why you would have to trust a lender - they're the one giving you the money!

There's a fair difference between 3.8% and 3.55% (the effective KBC variable rate <60% LTV), which depending on the size of your loan could translate into a saving of thousands, if not tens of thousands, of euro over the remaining life of loan. KBC contribute €1,000 towards legal costs and pay your house insurance premiums for a year so the costs of switching would be negligible.

If you're concerned about KBC raising their variable rate in short order, Ulster Bank now offer a three-year fixed rate mortgage (fixed until 31/08/2018) for <60% LTV @ 3.65%, which is fairly attractive, particularly as Ulster Bank will make a payment of €1,500 which should more than cover all switching costs.

Here's an article on the subject that Fiona Reddan wrote in the Irish Times back in February with some further detail:

http://www.irishtimes.com/business/...ring-significant-financial-benefits-1.2114172
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I need to check exactly what the remaining term was reduced to the last time I paid a lump sum but let's assume there's exactly 15 years left to run and 200k of principal. It seems to me that monthly repayments at 3.8% are of the order of €1,453, whilst monthly repayments at 3.55% are €1,429 (there or thereabouts). The net saving over the 15 years is c€4,300.

That is not to be sniffed at. However, thesaving over the course of the first 2 years is less than €600. The net cost of switching might be 1700, less €1000 received from KBC. So someone in this scenario would need at least 2-3 years with KBC at a saving of 0.25% to break even. (Correct me if I'm wrong)

In this scenario, the differential may not be enough for a borrower to take the chance that KBC will offer a 0.25% discount to their existing lender for at least 3 years.
 
I would strongly advise anyone against fixing now - especially for three years - as I would expect fixed rates and variable rates to fall.[/QUOTE]

Hi Brendan,

Based on your above comment, would you expect AIB to further drop their variable rate over the next few months excluding the rate drop they've already planned for June? The reason i ask is because their 1 year fixed is quite an attractive option right now and i was tempted by it. But then we had all the news breaking last week of the meetings with the minister were he stated he would expect ALL lenders to drop their rates further. Do you think AIB will be one of these to drop again?

Regards
 
Thanks alot Brendan.

Just in connection to this, i have been following this issue for the last few months or so on your website and i just want to extend my gratitude to you and all the other people who have brought this issue to the forefront of the political agenda. If it wasn't for yourself and a handful of others this issue would have never made it to this point. So i just want to say thanks.
 
Brendan Burgess said:
If you start with an SVR, you can switch to an LTV product.

But if you start with a >80% LTV, you can't switch to a <50% LTV.

It doesn't really make sense to me, but I presume that AIB is simply exploiting inertia.

Anyone who is refused such a switch, should move to KBC.
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Is that written into the contracts or is it simply their policy?
If it's the latter (or maybe even the former) could it be challenged as unfair (e.g. first with them and then, if necessary, with the FSO)?
Might be relevant to those who, for one reason or another, cannot switch to another lender?
 
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