Mortgage Prisoners - time to get loud!!

[Early Riser]

They kept their default variable rates artificially high. So while you could fix with ptsb or BoI at 3%, when the fixed rate ended you defaulted to variable rates of up to 4.5%. You could usually fix again at 3%, but a lot of people didn't.

So the vulture funds are adding the ECB rate increases to an artificially high variable rate.

Would you say that the mainstream banks mortgage rates are artificially high now? As they are at least close to the lowest in Europe, might they have now switched to being be artificially low? Funded by massive captive deposits on which they pay almost no interest (aided and abetted by the government)?

 

[Brendan Burgess]

I think that the appropriate comparison for this thread is the rates being paid by customers of vulture funds with the rates in the rest of the eurozone.

I suspect that the vulture fund rates at about 4% over ECB are much higher.

Brendan

 

[Early Riser]

I think that the appropriate comparison for this thread is the rates being paid by customers of vulture funds with the rates in the rest of the eurozone.

Exactly. The appropriate comparison is with current eurozone variable rates rather than with the current artificially low Irish ones.

 

[Brendan Burgess]

Here are the rates for February

Eurozone average just under 3.3%.
They have probably risen to 3.8% in March/April.

Vulture Funds are charging almost twice that at 7%

Brendan

 

[CorkHome2022]

The so-called "vulture banks" are in a somewhat different situation to the mainstream banks, I would have thought.
The mainstreams are crammed full of customer deposits at the moment, on which they are paying almost no interest. They are using these to cover their lending/mortgages. The "vultures" do not have a deposit base and are dependent on market funding - and hence are more closely linked to the rising ECB rate.

The " Vultures " bought the Mortgage Portfolios at a massive discount so even allowing for market conditions they are still charging way over the top in terms of interest , I was told on very reliable authority that Start bought the Project Glas Portfoilio for a 38% discount so even charging zero interest they stand to make big money .
In respect of the so called "Vultures" none publicly show their rates as they will use the SFS to squeeze as much from each account , dont be fooled by some temporary arrangement which saves on the monthly repayment the customer will end up paying multiples of the "savings" back over the longer term.

 

[Early Riser]

Start bought the Project Glas Portfoilio for a 38% discount so even charging zero interest they stand to make big money .

Given the extraordinary difficulty and time delay in securing collateral in cases of default or non-engagement in this country, I very much doubt that that they could make any money "charging zero interest" on the Project Glas portfolio :

"PTSB said of the 7,400 owner-occupier mortgages, 2,500 of those accounts are classified as "not co-operating", adding a further 3,850 accounts have either "refused treatments" or "the account has failed to operate in line with the agreed 'Treatment'".

Project Glas also includes 3,300 buy-to-let properties." (RTE 31 July 2018)

That is not withstanding these unfortunates who were included in the portfolio (and without whom the write down would have been undoubtedly larger):

"Last month, the bank confirmed that 1,050 loans on family homes, which are performing or meeting the terms of an agreed restructuring arrangement, are included in those being sold to Lone Star.

The bank said they were included in the sale because the borrowers have other loans which are in arrears." (RTE 2 Oct 2018)

 

[thedaddyman]

Hi Dad

Unfortunately, that is a common misunderstanding of the situation - share by the Central Bank and the Government. "The vultures have just put up rates in line with the increases in ECB rates - so what is the problem?"

The Irish banks competed for business on fixed rates. They kept their default variable rates artificially high. So while you could fix with ptsb or BoI at 3%, when the fixed rate ended you defaulted to variable rates of up to 4.5%. You could usually fix again at 3%, but a lot of people didn't.

So the vulture funds are adding the ECB rate increases to an artificially high variable rate.

Even if you were a switched-on customer and had fixed at 3%, now that your fixed rate is ending and your mortgage has been sold to a vulture fund, your mortgage rate is now up to 7.5%.

Brendan

So firstly, this issue does not impact on all mortgage holders with a vulture fund. It impacts those who had a fixed rate with a high street bank and doesn't impact to the same degree, those who had a tracker or variable rate mortgage.?

It should also be remembered that interest rates are coming from a historically low rate and high street bank rates are still significantly cheaper then in the UK as an example where the average standard variable rate is 7.74%

I'm not disputing this is an issue, but it does need to be seen in context. Vulture funds have also taken on additional risks given the significant difficulties in recovering the security of a loan that defaults in Ireland and I would have thought that has been factored into their thinking

 

[Brendan Burgess]

It impacts those who had a fixed rate with a high street bank and doesn't impact to the same degree, those who had a tracker or variable rate mortgage.?

Again, you fail to fully understand the issue. And this is the problem I have in trying to explain it to the Central Bank or the Dept of Finance. "all they are doing is passing on interest rate increases."

Tracker mortgage holders - They have lost the ability to fix their mortgage rate. A ptsb customer could have fixed at 3% but the vultures don't offer fixed rates.

Non-tracker variables. Are fully impacted. They were usually on artificially high rates. They are now paying 3.5% on top of the artificially high rate.

Brendan

 

[Brendan Burgess]

high street bank rates are still significantly cheaper then in the UK as an example where the average standard variable rate is 7.74%

1) The UK is not in the eurozone, so not sure that the comparison is appropriate.

2) The UK banks also compete on fixed rates and keep artificially high default variable rates.
I don't know the average, but I just checked HSBC <80% LTV

 

[Brendan Burgess]

Vulture funds have also taken on additional risks given the significant difficulties in recovering the security of a loan that defaults in Ireland and I would have thought that has been factored into their thinking

That was taken into account when they bought the loans at a big discount because of the forced sale.

Brendan

 

[Early Riser]

They are now paying 3.5% on top of the artificially high rate.

Not currently. 3.2% above the current EU average rate, according to your Data in Post 24. Perhaps, this is still too high (IDK), but it is a better benchmark (avoiding Irish rates which were artificially high but are now artificially low).

 

[Brendan Burgess]

Hi Early Riser

My point is that the banks were charging artificially high variable rates. The funds have added 3.5% to them. So if, for example, KBC was charging 4%, their vulture fund customer is now paying 7.5%.

If the ptsb rate was 3.9% , the vulture fund customer is paying 7.4%

Brendan

 

[CorkHome2022]

Given the extraordinary difficulty and time delay in securing collateral in cases of default or non-engagement in this country, I very much doubt that that they could make any money "charging zero interest" on the Project Glas portfolio :

"PTSB said of the 7,400 owner-occupier mortgages, 2,500 of those accounts are classified as "not co-operating", adding a further 3,850 accounts have either "refused treatments" or "the account has failed to operate in line with the agreed 'Treatment'".

Project Glas also includes 3,300 buy-to-let properties." (RTE 31 July 2018)

That is not withstanding these unfortunates who were included in the portfolio (and without whom the write down would have been undoubtedly larger):

"Last month, the bank confirmed that 1,050 loans on family homes, which are performing or meeting the terms of an agreed restructuring arrangement, are included in those being sold to Lone Star.

The bank said they were included in the sale because the borrowers have other loans which are in arrears." (RTE 2 Oct 2018)

PTSB told blatant lies , our Mortgage had been restructured and performing and we had no other loans leveraged on our home so absolute no reason for putting us into the Project Glas Sale other than bulking it up with performing mortgages to make up for the dross which will end up in the courts .

 

[Superman8]

It seems my post was deleted for taking it off topic. Just want to clarify the point I was trying to make, probably badly.

The banks are able to keep mortgage rates low at the minute because they are funding via large deposits. Vulture funds are a business and dont have such options. I think banks are using opportunity to squeeze companies who were reliant on lower ECB rates, but make no mistake, the banks will follow suite eventually. Thats the only point I was making.

Can I ask, what is preventing people form switching back to a bank. I know there is something but what is it?.

 

[Brendan Burgess]

our Mortgage had been restructured and performing

HI Cork Home

ptsb did not want to sell your mortgage but they were forced to by the Central Bank.

If it was a split mortgage or a mortgage where there would be a balance at the end of the term, the CB deemed it non performing.

Brendan

 

[CorkHome2022]

HI Cork Home

ptsb did not want to sell your mortgage but they were forced to by the Central Bank.

If it was a split mortgage or a mortgage where there would be a balance at the end of the term, the CB deemed it non performing.

Brendan

There was no Split , the Arrears had been fully Capitalised and no other loans with PTSB so the excuse of " other arrears " did not exist . I believe others had found themselves in a similar position .

 

[thedaddyman]

Again, you fail to fully understand the issue. And this is the problem I have in trying to explain it to the Central Bank or the Dept of Finance. "all they are doing is passing on interest rate increases."

Tracker mortgage holders - They have lost the ability to fix their mortgage rate. A ptsb customer could have fixed at 3% but the vultures don't offer fixed rates.

Non-tracker variables. Are fully impacted. They were usually on artificially high rates. They are now paying 3.5% on top of the artificially high rate.

Brendan

Vultures are under no obligation to offer fixed rates to anyone and if they were, the price they would have paid the banks for the loans books would have been different. After all, PTSB could turn around tomorrow and say there were making a business decision to only offer variable rates in the same way banks don't offer trackers anymore.

I'm not disputing that this is an issue for the mortgage holders affected but in reality, nothing can be done about it unless someone is prepared to challenge the sale of their mortgage in Court. Even if CBI "ordered" the vulture funds to offer fixed mortgages and "ordered" them to stick to certain rates, they could not obligate them to sign up anyone who asked for a fixed rate.

 

[Brendan Burgess]

Hi Dad

Agree with a lot you said. For a long time ptsb did not offer fixed rates to existing customers. And for a long time, when they did, they were exorbitant.

But my solution is simple.
The Consumer Protection Code requires lenders to treat customers fairly.
A fair solution would be for the vulture funds to offer their customers the same deals offered by the lender who sold them.
In this way, the borrower has not lost out by being sold to a vulture.

Brendan

 

[lff12]

I dont want to be upsetting anyone. There is nothing worse than been under genuine financial pressure be it from any angle. I remember paying an interest rate of 13.95% many years back. It was awful but I had to suck it up and take on extra work to make the payments.
Taking on a mortgage is a serious undertaking. Rates have been much much higher a lot of the years.
If anybody expects the government/tax payer to step in each and every time rates rise they are sadly in for a shock. It simply will not happen.

I think the issue here is that the customers are prevented from switching to another provider.
Then again that would be the case for many with standard bank lenders whose finances are not in good shape.

That said, an FTB taking out a 20 year jumbo mortgage on a fixed rate for 5 years right now would be paying 4.5% rather than the 2.85% I got nearly a year ago (which wasn't the lowest at the time either)

 

[lff12]

There was no Split , the Arrears had been fully Capitalised and no other loans with PTSB so the excuse of " other arrears " did not exist . I believe others had found themselves in a similar position .

Could be wrong, but capitalised arrears still fall into the restructured category and thus considered "arrears"? (Depending on the actual arrangement, but unless a reduced interest rate was applied this technically should have made your loan even more profitable?) I know from reading a CB paper on the topic of interest only yesterday that even performing loans that were recapitalised are still regarded as arrears because they are not in line with original agreement.

Line 26 under table 4 here - it would seem that recapitalised loans are still regarded as non-performing even if meeting the new terms since recapitalisation?
Main link to CB stats here