Key Post PTSB reduce the rate for new business SVR to 3.7%

According to Charlie Weston in today's Irish Indo, the PTSB is to reduce the rates for new buyers will drop to as low as 3.69pc from next Monday

Permanent TSB will announce today that its variable rate for new buyers will drop to as low as 3.69pc from next Monday, the [broken link removed] understands.


Existing borrowers will not benefit from the new rate, although the lender did cut all its rates for existing borrowers by 0.7pc last month.

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It's not clear if this is true, or if it's true, what it means. The current rate for new customers is 4.6% for the first year only, after which it is 5.2%

Reducing this to 3.6% is completely irrelevant as they are not doing any new business. Given PTSB's attitude to their existing customers, one would have to be mad or desperate to borrow from PTSB.

They justified their higher rates by saying that was due to the high cost of funds. How can they then claim to lend at 3.6%?

I got this from their letter to brokers

New Mortgage Rates for Term*:
We are introducing a new set of rates for Home Loan customers as follows:

Mortgage Type

| LTV| Rate Home Loan Variable for Term|<80%|3.69% Home Loan Variable for Term|>80%|5.19%

The above Home Loan rates are available up to a maximum of 90% for FTBs and 85% LTV for STBs (no change). There is no change to Mortgage Top up rates.




*For Term refers to the product, not the rate. These loans are variable rate, but there is no roll on rate as there was with previous products.

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So, PTSB can make a profit through lending at 3.69%!

Brendan Burgess said:

So, PTSB can make a profit through lending at 3.69%!

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It can to a subset of customers who are not in negative equity. I.e. those subset of customers who are on the lower end of the risk scale. You have to include bad debt provision as part of the costs of doing business. What PSTB is doing is plain old customer segmentation. The logic that this is an economic market rate for all SVR customers is flawed.

If they can offer 3.69% for new business, they should be offering close to that for all their SVR customers full stop.

Yes, those of us in negative equity with our mortgages may be risky for PTSB but they are running the risk themselves of pushing us into an arrears situation through the affliction that is effectively a sub-prime interest rate level!

There is some merit in charging more for LTVs in excess of 80%, but not a full 1.5%.

If this is simply because of some risk adjusted pricing, they should reduce the rate for existing customers with LTVs lower than 80%.

This is just pure exploitation of existing borrowers who can't move - no more and no less.

Brendan

They have today announced that this product where the rate was reduced for the term has been withdrawn. (They haven't actually said that , but this is what they have done)

In order to simplify our Home Loan offering to our customers permanent tsb are launching a new 1 Year New Business Variable Rate for Home Loan Mortgage business at 3.99% for all LTVs.

This rate will apply for the first 12 months, after which it will then mature to the Standard Variable Rate.

Mortgage Type 1 Year New Business Variable
Max LTV <90%
Introductory Rate 3.99%
Maturity Rate SV (Currently 4.34%)

The above Home Loan rate is available up to a maximum of 90% LTV for First Time Buyers and Second Time Buyers (no change). There is no change to the Mortgage Top-Up LTV Variable rates.

The new product will be available from Monday 3rd September and will replace the current Home Loan New Business Variable Rates of 3.69% (<80% LTV) and 4.34% (>80% LTV).

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