ptsb to offer 2% cash back to new customers

Brendan Burgess

Founder
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54,822
More gimmicks from an Irish bank instead of cutting rates.

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The Central Bank should outlaw these gimmicks as the ordinary borrower is not in a position to understand that it will cost them a lot more in the long-term and they allow the banks to avoid competing with each other on rate.

Brendan
 
And beware the PTSB who sold loans to Havbell etc. They love you and bombard you to get you hooked, and once hooked they have you forever.

If one is going to take the 2%, knock it off the mortgage from the get go.
 
the 0.5% discount mentioned in that article is already in place, it's not a new measure. For <60% LTV their rate is 3.7% discounted to 3.2% for the first year. That plus the 2% cashback is a pretty good deal, I assume there'll be a clawback period though like with BOI.
 
Another gimmick. They still have done nothing about reducing their high interest rates. Mr Noonan where are you?
 
I love Karl Deeter's line that cash-back offers are the banking equivalent of cheap cologne. It may well be a gimmick - but it seems to work.

In my opinion it's really up to consumers to evaluate these deals for themselves and not to expect regulators or government ministers to do so on their behalf.
 
Sarenco said:
In my opinion it's really up to consumers to evaluate these deals for themselves and not to expect regulators or government ministers to do so on their behalf.
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Hi Sarenco

I believe in a free market. But there is no way that ordinary consumers are able to evaluate an offer like this.

In my view, this is a trick and people will be fooled by it.

Brendan
 
Brendan Burgess said:
Hi Sarenco

I believe in a free market. But there is no way that ordinary consumers are able to evaluate an offer like this.

In my view, this is a trick and people will be fooled by it.

Brendan
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Could not a agree more Brendan, They'll trick and fool people into these gimmicks and then when it comes to light what they were actually trying to achieve. They'll fall back on "we told you to have a solicitor look at this".

Very unfair practice.

Agreed Outlaw the gimmicks.
 
todo said:
They'll trick and fool people into these gimmicks and then when it comes to light what they were actually trying to achieve. They'll fall back on "we told you to have a solicitor look at this"
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Sadly the converse is true though, the Oirish public will play the 'but we just signed cos' the guy in the bank and my friends all said it was a great deal, loike' followed by the 'gubernment did nuffink and should compensate us'.
 
Brendan Burgess said:
there is no way that ordinary consumers are able to evaluate an offer like this.
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Really? Even with the ESIS and comparison websites? I would have thought it was fairly straightforward to evaluate such an offer. Are we going to prohibit discounted offers on all financial products? I really don't see the problem - where's the "trick"?
 
elcato said:
Sadly the converse is true though, the Oirish public will play the 'but we just signed cos' the guy in the bank and my friends all said it was a great deal, loike' followed by the 'gubernment did nuffink and should compensate us'.
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In my experience the banks are pretty sneaky, they'll leave out a special condition or the small terms and conditions will have changed, or this will supersede that or the other. They wont shout from the roof tops that their contract states that they can change the rate at any time at their own discretion.

I know one think for sure is that these gimmicks are not in the consumers best interest. They are just looking to squeeze every euro they can from the consumer and try to lock them in, in such away that they have no choice but to pay what ever rate the bank wants to charge.
 
todo said:
They wont shout from the roof tops that their contract states that they can change the rate at any time at their own discretion.
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Did you miss the statutory notices in caps and bold font at the top of the loan application form?

THE PAYMENT RATES ON THIS HOUSING LOAN MAY BE ADJUSTED BY THE LENDER FROM TIME TO TIME.

How exactly is getting 2% of the amount borrowed back in cash not in a consumer's best interest?
 
My firm view is to stay well clear of this gimmick.I have a variable rate commercial mortgage with Ptsb and find them impossible to deal with despite having never missed a payment.Ptsb are just following the BOI offer.
The real issue is the interest rate.
 

"THE PAYMENT RATES ON THIS HOUSING LOAN MAY BE ADJUSTED BY THE LENDER FROM TIME TO TIME."

An interesting way of putting it.

Wouldn't it be a lot clearer and less sneaky if they stated that "We can charge any interest rate we want"

I would also argue that "Payment Rates" is ambiguous, does this relate to the interest rate being charged or could it relate to the amount being paid over a unit of time and if so does that have any effect on the term of the loan.

All i'm saying is that everything should be put in plain simple english, no gimmicks.

These banks have a very unfair power over the consumer, and in my view interest rates that can be varied to any amount at any time by one side is a very unfair term in a contract.
 
Hi Todo, you correctly point out the power the lender has over the customer. Unfortunately we signed up for this and there's nothing we can do about it. The banks have abused their right to do this quite blatantly and will continue to do so as they see fit as they know they will get away with it. I will be putting a post together on the thread about the general election but on this thread those bank offers are only a gimmick and should be stopped.
 



Let's start with the trick. Interest rates in Ireland are about 2% higher than they are in the rest of the Eurozone. You can argue and I would agree that as we don't allow repossessions, rates should be higher. But they should not be 2% higher at low LTVs where there are no losses.

If we had a properly competitive market, lenders would reduce rates towards the Eurozone rate which would still leave these products very profitable.

We have focused attention on the fact that lenders charge new customers lower rates than existing customers and this has led to some banks offering the existing customers the same rates as the new customers e.g. ptsb. For ptsb to get business, they will have to reduce the rate for existing customers as well. So instead, they leave their rates high and offer this incentive. So effectively they are exploiting the existing customers who can't move due to high LTVs or a bad credit record and those who aren't organised enough to move.

The law should be changed so that lenders must offer existing customers the same price as new customers. And the only way that they can attract new customers is through clear interest rates with no gimmicks at all.

So that's the trick.

I used to be of the view that as long as the bank was clear about its terms and conditions, then it was up to the customer to evaluate the product. I changed my mind on this when I saw the reality that most people are simply financially illiterate. They cannot understand financial products. You and I and many other Askaboutmoney users can understand these gimmicks. But most people simply see "2% cash back" and can't get beyond that.

AIB and Ulster Bank may be forced to do something similar to attract new business.
 
Is this available to those of us in negative equity? Doubt it. Ah well, another few years of struggling and maybe I'll hit parity!!
 

Ok, so you're not saying that there is anything deceptive about the cash back offer itself but rather that most borrowers do not understand mortgages and therefore cannot evaluate the real value of the cash back offer. I think we'll have to agree to disagree on that point.

The cash back offer would be attractive to borrowers that need to direct all, or substantially all, of their savings towards a property's purchase price to meet a particular LTV ratio and could apply the cash back proceeds towards legal fees and outlay (including stamp duty) or renovation/furnishing costs.

There is obviously a material administrative cost to a lender in originating a home loan but, unlike the position in most countries, it is not market practice here for lenders to charge arrangement fees. For example, French and Spanish lenders typically charge around 1% of the amount advanced as an arrangement fee. Is the absence of arrangement fees here a gimmick?
 
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I have often wondered about this. In the UK, with most lenders you can opt for a mortgage without arrangement fees, or one with arrangements fees and a lower interest rate. The arrangement fee is usually in the order of £900.

For example, with First Direct if you want to borrow up to 80% LTV, you will pay a tracker rate of 2.99% and no arrangement fee, or 2.49% with an arrangement fee. (By the way, that is Bank of England rate +1.99% for the duration of the mortgage)

This seems like a good approach for the customer. If you were borrowing £100,000 you would clearly opt to pay the arrangement fee as you would recover it in just over two years from lower interest.

In general, I am a fan of customers being charged for the service they get. So, I have no problem with companies charging more to customers who pay with credit cards. I don't like free current accounts, as it means that someone else is subsidising them.

So, to get back to your question. I would welcome the introduction of arrangement fees combined with lower interest rates. It's crazy that we are doing the very opposite in Ireland.

Brendan
 
Brendan Burgess said:
So, to get back to your question. I would welcome the introduction of arrangement fees combined with lower interest rates. It's crazy that we are doing the very opposite in Ireland.
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I don't disagree but I assume lenders here have determined (rightly or wrongly) that there would be limited demand for such products. Bank of Ireland, for example, offer (materially) lower rates with an arrangement fee in Northern Ireland but not here.

Irish consumers appear to be extremely reluctant to make any upfront payment for any financial product or service and many appear to want to be able to maximise their borrowings by any means available to them. It may not be in their long term interests but you can't really criticise banks for offering products that people apparently want.

In principle, I don't believe bank regulators should seek to shape market preferences. Their primary role, in my opinion, is to ensure so far as is reasonably practical that banks will always be in a position to meet their obligations to depositors given the high societal cost of bank failures.
 
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