Key Post Mortgage rates summary after the Minister's intervention

I have summarised the existing rates for all active lenders on the attached.

It is complicated. Let me know if you spot any errors.

Key points

Ulster Bank, AIB and ptsb no longer discriminate between new and existing customers - more or less.

KBC and Bank of Ireland still treat existing customers a lot less favourably than new customers. If you are thinking of taking out a mortgage with KBC or BoI, don't forget that you will soon be an existing customer and can expect to be fleeced to fund their lower rates for new business.

Variable rates paid by existing customers with an LTV over 80%



The customers of AIB, BoI and KBC can reduce this rate by fixing.



The lowest rate on the market is 3.3% - available to Ulster Bank customers with an LTV <60% who fix for three years and new KBC customers of any LTV who fix for one year.

Assessment

The average variable rate for new mortgage business across the Eurozone was 2.02% in March.
The average variable rate for [broken link removed] in Ireland in May was 4.13%.

After these cuts, it's probably still just over 4%.

So Irish borrowers are still paying around twice the Eurozone average.

For a borrower with a €200,000 mortgage, the additional interest is over €300 a month.


Why are Irish borrowers paying so much more than Eurozone borrowers?

It's not that they are paying more for deposits - across the Eurozone, the [broken link removed] in notice accounts was 0.8%. While the Irish Central Bank does not publish this figure for Ireland, it does not seem too far out of line. AIB, BoI and Ulster Bank pay more for deposits and charge less for mortgages in Northern Ireland than they do in the Republic. In particular, low LTV mortgages are much cheaper in the North.

The cost of risk is definitely higher in Ireland than in the rest of Europe as the process for repossession is very expensive and very lengthy. (We have 10 times the level of arrears as the UK, but only one tenth the level of repossessions. )However, this does not explain why very low LTV mortgages which have a much lower probability of default and which have very low losses where a default occurs are also at least 2% more expensive than the rest of the Eurozone.

Irish variable rate borrowers are being fleeced to pay for the losses lenders make on tracker mortgages. They are also paying more to compensate for the borrowers who don't pay their mortgages.

There is little or no competition in the Irish market. While there is a switcher market, only around 30 borrowers a month manage to switch their mortgages.

Maybe put an asterisk beside KBC.
KBC is only 3.9% if you have a current account with them and get your pay paid into that account. Otherwise it's 4.1%
I don't know if the other lenders have similar conditions. I only know about KBC as I'm a KBC customer (for about 2 more months).

For a .2% saving it's worth opening the current account but it might not suit everybody.

Thanks Mick, I will update that on the next version of it.

Is there any option for someone with Danske and in negative equity to switch to any of these products ?

No

Thanks for the confirmation BB.

Do you know how long KBC treat you as a 'new' customer? I have recently taken out a mortgage with them and have a rate of 3.6%.

Will this switch to the existing business rate next year? I can't find anything in my documentation.

Surely you're a new customer or not.
In your case - not.
On the other hand don't let that stop you haggling for better rates that may not be available to existing customers.
Normally the loan offer letter/contract specifies what happens when any initial fixed rate period expires and usually it's a choice of the rates on offer when that happens.

I'm on a variable rate of 3.6% (80% ltv and 0.2% discount). The SVR is 4.5% before any discounts. If I don't move to a fixed rate or change my product, will I always have a lower rate than the SVR?

Sorry - I thought you meant that you were on 3.6% fixed for the first year or something like that.
I think you'll have to ask your lender how long your discount lasts and what happens in the future.
I'm not sure that anybody here can say for sure.

As I understand it...

The people who are really being fleeced are the SVR customers. They are paying 4.3% irrespective of LTV. The only way they can get a reduction in the variable rate is to switch lenders.

You are not on an SVR. You are on a 60% to 80% LTV mortgage. KBC charges new and existing customers who have an LTV mortgage the same rate. If they lower this rate, you should get the lower rate.

That is the current practice and it may well change. For example, if a new lender enters the market, KBC might leave its rate at 3.6% but offer new customers a 1% discount for three years. Or it could up the rate on the 60% to 80% LTV but offer a bigger discount for new customers.

Brendan

Brendan Burgess said:

You are not on an SVR. You are on a 60% to 80% LTV mortgage. KBC charges new and existing customers who have an LTV mortgage the same rate. If they lower this rate, you should get the lower rate.

Click to expand...

I don't believe this to be the case. We drew down our mortgage with KBC September last (2014), 60-80% LTV. At the time the rate for new customers at this LTV was 3.99, or 3.79 with current account offer. Since then they have reduced this rate twice I believe, by .09 and by .10 which leaves you at current rate of 3.60 including current account offer. Unfortunately we remain on 3.79.

That would suggest that they have groups of recently acquired customers in same LTV categories at differing rates. Beg's the question if\when they might review these rates? Would they just apply any adjustment to the SVR to these varying LTV rates?

Hi GN

I stand corrected, and appalled.

Brendan

We are on a SVR mortgage of 3.95% with EBS. We have a mortgage with them for over the past 20 years, also our Current account and our 3 teenager accounts are with them. I went and met the branch manager today and asked could we go on the LTV ( Loan to Value ) rate of 3.55%. My loan to value is approx 15% at present. I was told the LTV is calculated when the loan is taken out!! and I was not entitled to it.
I said if a person comes in off the street they could get this rate and yet with 20 year mortgage with no issues with repayments not entitled to LTV rate.
Strongly thinking about shifting mortgage and all accounts from EBS!!!!!!

Brendan Burgess said:

I stand corrected, and appalled.

Click to expand...

I actually believe there are two major injustices for Irish variable mortgage holders, with certain institutions. Firstly is the rate being charged, which as commented above is twice the EU average.

Secondly is the practice by some institutions of treating existing and new customers differently while on the same product. Bank of Ireland and KBC are particularly guilty of this - and I do not know who else are.

The idea that I can be on a <60% LTV rate and this rate to drop for new customers only is appalling. I think this is something the legislators should do something about asap. I have contacted by local government TD on this and advised them that I do not want to see them at my door step asking me for a vote unless this issue is addressed before they leave government. If they do, they will get the same reception as another ex-Government minister got during the locals !

Removed previous post as I see in additional thread that PTSB will be rectifying in August. Apologies to PTSB and happy days!

I have just received written confirmation from KBC outlining their policy of treating existing and new customers differently with regard to variable rate mortgages -

We are writing in relation to the above numbered mortgage account.

With regard to your recent query I wish to confirm that the interest rate applicable to your mortgage is currently 3.79%. This is the variable rate for accounts with a 60-80% Loan to Value, inclusive of .20% current account discount, for loan that drew down in September 2014.

The interest rate you quoted in your correspondence to us of 3.60% is the current variable rate for accounts with a 60-80% Loan to Value, inclusive of the current account discount, is for new loans that have drawn down since the 1st July 2015.

Should you require any further information, please do not hesitate to contact our Customer Services Department on (01) 6646100 or by email to customerservicesATkbc.ie.

Click to expand...

This is in stark contrast to how AIB treat existing customers, who now also offer better rates than KBC.

GN

KBC, PTSB both offer €1000 for legal fees,
BOI have the 2% cash back offer but lock you in for 5 years
AIB and EBS I cant find anything on these banks.

If AIB/EBS paid the legal fees I would switch...

Does anyone have a table that also factors in the offers the banks will give you if you switch your current account to them or other type incentives. E.g. UlsterBank have a 3.35% discounted variable rate if you have a current account with them.

I would like to get all the other offers each bank is offering to try and create a table of the cheapest lender.