Is the recommendation to avoid Bank of Ireland still justified?

[DublinHead54]

So a few guidelines

1) Avoid Bank of Ireland, they charge existing customers higher rates than new customers, so you will pay a lot more in the longer term.

BOI 5YR Fixed is now 3.25%, does that not make them competitive now vs the others?

They only charge existing customers higher rates than new customers in a world of falling interest rates surely? Any new customer now will be getting a rate that is likely higher than what exsiting customers have fixed on.

In my experience with BOI since 2020, I started on a 1 year fix for 2.9%, got that to 2.6% after one year, and then broke and fixed for 5 years at 3%. The rates offered were all aligned to what new customers were being offered.

I almost switched to Avant, and now I would be facing a higher 5yr fixed rate with them than what BOI offer.

 

[NoRegretsCoyote]

In my experience with BOI since 2020, I started on a 1 year fix for 2.9%, got that to 2.6% after one year, and then broke and fixed for 5 years at 3%. The rates offered were all aligned to what new customers were being offered.

As an existing customer I've got BoI to knock 0.1pp off the advertised rate on two occasions when fixing.

 

[Paul F]

In my experience with BOI since 2020, I started on a 1 year fix for 2.9%, got that to 2.6% after one year, and then broke and fixed for 5 years at 3%. The rates offered were all aligned to what new customers were being offered.

This came up in another thread that you participated in back in September. You were not offered all of the rates that BOI offer to new customers.

 

[DublinHead54]

This came up in another thread that you participated in back in September. You were not offered all of the rates that BOI offer to new customers.

I don't believe that justifies a blanket 'stay away from BOI' especially after the rising rate environment.

Don't other lenders such as AIB offer green rate discounts?

If the mantra is to always switch to the bet rate, it looks like BOI offer some of the best rates in the market now.

Aren't BOIs follow on fixed rates competitive?

 

[DublinHead54]

My example would be as a BOI mortgage holder on a 5yr fixed at 3%.

If my rate ends tomorrow I will be able to fix again at 3% as an existing customer or 3.25% as a new customer.

If I were to switch to avant the 5 year fixed rates range from 3.65-3.85%.

To me that means BOI is a better deal currently as an existing customer and a switcher.

My view is that if rates are rising, when my fixed rate ends it is likely the prevailing market rates will be greater than my existing fixed rate. Thus negates any issue of existing customers being charged higher rates than new customers.

Am I looking at this wrong?

 

[Brendan Burgess]

Hi DublinHead

An interesting point and it's always worth revisiting the guidance. (For example, ptsb seems to have changed their policy and Paul F. has included them in the Best Buy Tables as a result.)

If you are borrowing >80%, here are the current rates for BoI and AIB.

(I am ignoring the short-term rates, as it would make no sense to take out a variable rate or short-term fix with Bank of Ireland as a new customer.)



Bank of Ireland also give 2% cash back up front and a further 1% after 5 years.

So, there is no doubt, that today, Bank of Ireland is much better value than AIB.

If you are an existing customer of Bank of Ireland, you would still be better off staying with Bank of Ireland, rather than switching to AIB.



The problem is that this favourable comparison is very recent. At any time in the recent past, AIB was cheaper for existing customers than Bank of Ireland.

Has Bank of Ireland changed its policy? Have they decided that they will offer cheaper rates than AIB and give cash back?

BoI has had a long history of exploiting customers. Look at their variable rate! You are switched on. Most readers of Askaboutmoney are switched on. But there are thousands of BoI customers whose fixed rate ended who defaulted to 4.5% and that is the rate they are on today.

In contrast, AIB has the same rates for new and existing customers. When mortgage rates fell, AIB reduced their variable rates both for new customers and for existing customers. That is the way lenders should behave.

 

[DublinHead54]

Hi DublinHead

An interesting point and it's always worth revisiting the guidance. (For example, ptsb seems to have changed their policy and Paul F. has included them in the Best Buy Tables as a result.)

If you are a new customer borrowing >80%, here are the current rates for BoI and AIB.

(I am ignoring the short-term rates, as it would make no sense to take out a variable rate or short-term fix with Bank of Ireland as a new customer.)

View attachment 6930

Bank of Ireland also give 2% cash back up front and a further 1% after 5 years.

So, there is no doubt, that today, Bank of Ireland is much better value than AIB.

If you are an existing customer of Bank of Ireland, you would still be better off staying with Bank of Ireland, rather than switching to AIB.

The problem is that this favourable comparison is very recent. At any ti

I just noted on the rates section of BOI website they are offering a 5 yr fixed at 3% for existing customers vs 3.25% for switchers. This would mean they offer better rates for existing than new reversing the previous guidance on here.

 

[Brendan Burgess]

I like the Bank of Ireland 0.3% across the board discount for green mortgages.

But why do they give that to new customers only? Why not give that to existing customers?

Brendan

 

[Brendan Burgess]

I just noted on the rates section of BOI website they are offering a 5 yr fixed at 3% for existing customers vs 3.25% for switchers. This would mean they offer better rates for existing than new reversing the previous guidance on here.

Thanks. Table updated to reflect this peculiarity.

I think I have the rates comparison correct now.

Brendan

 

[NoRegretsCoyote]

BoI has had a long history of exploiting customers.

They also have a long history of being the best of a bad lot in Irish banking. They have always had the best credit risk management and they didn't lose $691m down the back of a sofa like AIB did in 2002.

BoI took the smallest bailout of all and have repaid it fully. Arguably they wouldn't have even needed one absent the stink around all Irish banks at the time.

At system level a race to the bottom on rates is not necessarily a good thing!

 

[Brendan Burgess]

They have always had the best credit risk management and they didn't lose $691m down the back of a sofa like AIB did in 2002.

Maybe a consideration for investors but not a consideration for someone taking out a mortgage.

 

[Brendan Burgess]

So what should a new customer do.

I adjusted my position on ptsb to say "Avoid ptsb unless there is a persuasive reason to go for them" and I think that would be the approach to Bank of Ireland as well. "Avoid Bank of Ireland unless there is a persuasive reason to go for them."

If you are fixing for 10 years, then the BoI 10 year rate is clearly better and you should go for BoI over AIB.

You should definitely avoid BoI for a variable rate or short-term fix, but that probably applies to all lenders: Avoid variable rates and short-term fixes. Though the AIB variable rate is now lower than their fixed rate.

4 years high value is very persuasive with Bank of Ireland.

5 years is probably on the margin. On balance, I would avoid Bank of Ireland because of their long record of exploiting customers.

But I would welcome if Bank of Ireland came out with a new mortgage rate policy statement saying that they were going to treat all customers fairly.

Brendan

 

[Brendan Burgess]

What should an existing Bank of Ireland customer do?

The rates for existing customers who fix today are comparatively good value, and they should not switch.

Brendan

 

[DublinHead54]

5 years is probably on the margin. On balance, I would avoid Bank of Ireland because of their long record of exploiting customers.

For a new customer / new mortgage it is unlikely the exploitation of the past will happen again in the same way. So I don't think that should be a consideration for a new customer.

BOI should be lined up against all the rates, and it looks like it is better than Avant right now. In addition there is little really known about Avant, as they are a new entrant. I had a horrible experience trying to move to avant, whereas my experience with BOI has been great, and their mortgage team are always pleasant and helpful when I have a query!

 

[time to plan]

So what should a new customer do.

I adjusted my position on ptsb to say "Avoid ptsb unless there is a persuasive reason to go for them" and I think that would be the approach to Bank of Ireland as well. "Avoid Bank of Ireland unless there is a persuasive reason to go for them."

If you are fixing for 10 years, then the BoI 10 year rate is clearly better and you should go for BoI over AIB.

You should definitely avoid BoI for a variable rate or short-term fix, but that probably applies to all lenders: Avoid variable rates and short-term fixes. Though the AIB variable rate is now lower than their fixed rate.

4 years high value is very persuasive with Bank of Ireland.

5 years is probably on the margin. On balance, I would avoid Bank of Ireland because of their long record of exploiting customers.

But I would welcome if Bank of Ireland came out with a new mortgage rate policy statement saying that they were going to treat all customers fairly.

Brendan

I think that's a bit more nuanced now Brendan. The BoI HVM 7 year fix is 2.8% even at >80% LTV. According to your best buy table https://www.askaboutmoney.com/threads/which-lenders-have-the-lowest-mortgage-rates.227484/ , nearest competitor is Haven @ 3.65% (with 5k cashback).

 

[Paul F]

Don't other lenders such as AIB offer green rate discounts?

They do, and so do Permanent TSB. But one crucial difference between AIB and PTSB on the one hand and Bank of Ireland on the other is that Bank of Ireland only offer this discount (and their high-value mortgage discount) to their new customers. AIB and PTSB offer these discounts to both new and existing customers.

If my rate ends tomorrow I will be able to fix again at 3% as an existing customer or 3.25% as a new customer.

If you are an existing Bank of Ireland customer, re-fixing with them right now could be a great choice – the rates are very competitive and it is very simple and quick to do.

But if you are looking to switch your mortgage to Bank of Ireland, or you are a first-time buyer or home mover, you run the risk that their rates will be uncompetitive by the time you come to draw down your mortgage. (Bank of Ireland have only increased their rates once so far this year, whereas AIB have increased theirs twice, so we might reasonably expect BOI to increase theirs again quite soon.)

The only sensible approach for a switcher, first-time-buyer or home mover is to apply to several lenders at the same time, get approval in principle from as many of them as possible, and do as many of the subsequent steps as possible before you have to tell your solicitor which lender to try to get full approval (a letter of offer) from.

Even if Bank of Ireland's rates for new customers are still competitive by the time you draw down your mortgage, the risk is that they increase their rates steadily over, say, the next 6 to 9 months to the point where they are again uncompetitive. While you may have succeeded in taking out a BOI mortgage at a good rate, you would be facing the prospect of rolling off onto a bad rate in a few years' time. Then you might want to switch again, which will cost you time and money. And that's assuming you are even able to switch in a few years' time – your financial situation may have deteriorated before then.

For a new customer / new mortgage it is unlikely the exploitation of the past will happen again in the same way. So I don't think that should be a consideration for a new customer.

But how can we know that? We can only wait and see how they increase their rates over the next ~9 months (or possibly more).

 

[DublinHead54]

They do, and so do Permanent TSB. But one crucial difference between AIB and PTSB on the one hand and Bank of Ireland on the other is that Bank of Ireland only offer this discount (and their high-value mortgage discount) to their new customers. AIB and PTSB offer these discounts to both new and existing customers.


If you are an existing Bank of Ireland customer, re-fixing with them right now could be a great choice – the rates are very competitive and it is very simple and quick to do.

But if you are looking to switch your mortgage to Bank of Ireland, or you are a first-time buyer or home mover, you run the risk that their rates will be uncompetitive by the time you come to draw down your mortgage. (Bank of Ireland have only increased their rates once so far this year, whereas AIB have increased theirs twice, so we might reasonably expect BOI to increase theirs again quite soon.)

The only sensible approach for a switcher, first-time-buyer or home mover is to apply to several lenders at the same time, get approval in principle from as many of them as possible, and do as many of the subsequent steps as possible before you have to tell your solicitor which lender to try to get full approval (a letter of offer) from.

Even if Bank of Ireland's rates for new customers are still competitive by the time you draw down your mortgage, the risk is that they increase their rates steadily over, say, the next 6 to 9 months to the point where they are again uncompetitive. While you may have succeeded in taking out a BOI mortgage at a good rate, you would be facing the prospect of rolling off onto a bad rate in a few years' time. Then you might want to switch again, which will cost you time and money. And that's assuming you are even able to switch in a few years' time – your financial situation may have deteriorated before then.


But how can we know that? We can only wait and see how they increase their rates over the next ~9 months (or possibly more).

There are a lot of assumptions in there, most of which are not unique to BoI i.e. all lenders could raise rates further in the next 9 months. Are you thinking that BOI rates are likely to increase past Avant?

What has changed in the last few months is that BOI's rates are now lower than its competitors. This forum has always leaned towards switching to the lowest rate available and not adding much weight of future rates in the decision. For example if 12 months ago you knew Avants prevailing rates would become some of the highest in the market they would unlikely have been recommended. It now seems that BoI is being discounted as a good option for risks that all other lenders are also exposed to.

 

[Brendan Burgess]

What has changed in the last few months is that BOI's rates are now lower than its competitors.

Hi Head

BoI has a long history of very high rates for existing customers. I would be delighted if they have changed their policy on this and that they have made a commitment to treating customers fairly. But they have made no such commitment, so I don't trust them.

They are still exploiting the inertia of customers who do nothing when their fixed rate ends - they are being charged up to 4.5%.

I really doubt that the leopard has changed its spots.

Having said that, if there is a compelling case to take out a medium term mortgage with BoI, you should do so and that case is compelling for 5 year rates (and maybe other rates.)

This forum has always leaned towards switching to the lowest rate available and not adding much weight of future rates in the decision.

I don't think so. Most posters have been fairly consistent about avoiding discounts and have advocated going for long term value.

But the considerations for long term fixed rates are very different than for variables or short term fixed rates.

Brendan