PTSB's exorbitant rates for investment mortgages

[John1]

I am a variable rate PTSB customer and I am paying 6.85% interest on my 25 year mortgage. My rate is due to reduce by .25% due to the recent ECB reduction announced on 3rd November 2011.

Approx. 3 weeks ago I wrote to Minister Noonan, Minister Quinn, Mr Matthew Elderfield. I also wrote to Ms Margaret Hayes and Mr Ray MacSharry who are both government appointed Directors of PTSB requesting them to press PTSB into reducing their variable rates to more reasonable levels. I highlighted the 3% variable rate differential between AIB and PTSB and pointed out that both are government owned and controlled.

I am in the process of making a complaint through the Financial Services Ombudsman. Last week I wrote to Shane Ross TD, Mick Wallace TD, Michael McGrath TD and FF spokesman on Finance. I called into my local TD's clinics where I met with a representative of Minister Lucinda Creighton of FG and a representative of Kevin Humphries TD of Labour.

So far Michael McGrath emailed back to say he was supportive and was examining international models where central banks intervene on bank’s interest rate policy.

My letter addressed to Ms Margaret Hayes and Mr Ray MacSharry was passed on to the Chief Executive of PTSB who wrote back to me confirming that he had to charge these rates due to the current high costs of funding being experienced by the bank. I was disappointed that both Government appointed Directors of PTSB did not deal with me directly on this issue and passed it on to the Chief Executive. I was hoping that they would have a different perspective on the matter seeing that they are public interest Directors.

Minister Lucinda Creighton’s office have confirmed they will forward my letter on to Minister Noonan.

Next week I intend to contact New Beginning and Walter Odlum solicitors of Protect Our Trackers to see if they are interested in or have any ideas to progress or move this campaign further.

The next ECB meeting is 8th December 2011 and if another rate reduction is announced presumably the media will begin their campaign to see what banks are passing on the rate reduction. I think this is an ideal time for all of us to highlight to all media and journalists about the variable rate interest differential between AIB and PTSB.

We need to organise a campaign on this and try to get traction. If we have numbers behind us I think we can succeed

 

[Brendan Burgess]

Owners of investment properties pay a higher rate than home owners.

There is more public and political sympaty for home owners.

In my opinion, the campaign should be limited to home owners.

That is not to say that there shouldn't be a campaign by owners of investment properties - it's just that it should be a separate campaign.

Brendan

 

[John1]

Extract of letter dated 25th November 2011 received from the Department of Finance in relation to a letter issued to Minister Noonan enquiring about the variable rate differential of approx 3% between AIB and PTSB which are both state controlled institutions.

“A balance must be maintained by the Government between support provided for individual banks and financial service providers generally through the bank guarantee scheme, other financial support incentives and broader public policy provisions, while at the same time, ensuring that the day-to-day running of these institutions has regard to competition, market conditions and the need to develop stable commercial enterprises to meet the long term credit needs of the households and businesses in the Irish Economy.

In this regard, the Minister has no function in relation to interest rate decisions made by individual lending institutions at any particular time.”

Extract of letter dated 25th November 2011 from Central Bank of Ireland in relation
to the same matter.

“We are involved in a period of intense engagement with lenders on the arrears issues, pressing for progress on a number of fronts such as the unsustainable mortgages question. In particular we are engaging with specific lenders who appear to have Standard Variable Rates set disproportionate to the cost of funds through our existing powers and suasion.”

The letter from the Department of Finance is very disappointing while the letter from the Central Bank of Ireland does hold out some hope that this very unfair situation is being looked at.

 

[Brendan Burgess]

In this regard, the Minister has no function in relation to interest rate decisions made by individual lending institutions at any particular time.”

John

That is very interesting. You should write back quoting everything that they said about the AIB failure to pass on the 0.25% rate decrease.

Brendan

 

[John1]

Brendan - good point. I will reply to Minister Noonan and post the answer here.

 

[fcdub]

Hi John1, I am also hounding these guys on the same subject. I have my home loan with pTSB and its on an extortionate variable rate. I dont see why investors should be treated much differently to home owners. It has become popular to blame "property investors" for the recession, but we all know the reality is most of these "investors" are middle income people who bought and apartment for their retirement fund as long term investments. Why should the banks screw these people?

pTSB were very clever at the last ECB rate reduction. They passed on the cut straight away to avoid scrutiny from the media and it worked. Instead of the media hounding them they hounded AIB who hadn't passed on any increases.

At least you are getting replies, I am getting "thats for your mail".

How do you propose we organise? I am on for joining a campaign.

 

[John1]

I undestand that PTSB are passing on a reduction of .71% to some of the variable rate home owners and investment variable rate mortgage holders. This reduction includes the .25% ECB rate decrease announced on 8th December 2011. This was announced in the media yesterday.

I called PTSB this morning to find out if my commercial variable rate mortgage which I took out to purchasse an investment property would be reduced. PTSB informed that I did not qualify for the .71% rate reduction, however they would pass on the ECB reduction of .25% to me.

My variable rate (after both ECB reductions) will decrease from 6.84% to 6.34%.

Are their any other variable rate investment mortgage holders out there who have only got the ECB rate reductions?

Are there any investment variable rate mortgage holders interested in joining me in a campaign to get PTSB to reduce these punitive variable rates?

 

[John1]

Fine Gael TD's seem to be following Minister Noonan's stance that the Government have no function in interest rate setting and it's just tough luck for variable rate PTSB customers.

The Central Bank have advised the Government they do not need any additional powers through legislation and are relying on their ability to persuade institutions like PTSB to reduce their variables rates. So far this strategy is not working and PTSB continue to charge variable interest rates that are out of line with other banks in the Irish Market.

PTSB have advised that their recent additional rate cut of 46 basis points applies to some customers only. Divide and conquer tactics by PTSB.

So far positivite feedback from Michael McGrath TD FF spokesman on Finance who advised by email today he would do his best to persuade Government to act on this "blatant anomaly"

 

[George12]

Hi John1, any progress on your efforts to fight the high investment rates? I am fixed at the moment at 5.25% but this will end soon and was told by the helpline yesterday that it will convert into a 5.99% variable. This is crazy in the current circumstances. I am thinking the best way to protest is simply not to pay and to advise of this in advance but obviously that could have implications in the future.

 

[Luternau]

I called PTSB this morning to find out if my commercial variable rate mortgage which I took out to purchasse an investment property would be reduced. PTSB informed that I did not qualify for the .71% rate reduction, however they would pass on the ECB reduction of .25% to me.

Are you certain that your mortgage is a 'Commercial' one? These would have seperate terms to those of the majority of buy to lets (RIP) which are covered under consumer credit legislation.
If you ask me, considering succusive ministers for finance are allowing PTSB operate under different rules to AIB/BOI, it may be in trouble. If its not there is no justification for their very high interest rates or other efforts re RIP Trackers

 

[John1]

George12,

Progress is frustratingly slow. PTSB have no intention of reducing their variable rates to normal market levels. Either the Government or PTSB customers will have to force their hand.

I have written to Minister Noonan and the Central Bank of Ireland raising Irish Constitutional issues in relation to the control of credit and EU anti competition concerns in relation to state aid for this 99 per cent state owned bank which is charging substantially higher variable rates compared to AIB which is 99 per cent state owned and Bank of Ireland which is 15 per cent sate owned. I have asked Minister Noonan why he favours AIB customers over PTSB customers.

I believe the campaign against PTSB for fair variable rates for home
mortgages, investment mortgages and commercial mortgages will gain further momentum in 2012.

My preference is to see if this campaign yields any results for PTSB variable rate customers before I would contemplate other action.

The Government and PTSB are much more likely to take notice of an organised collective group of customers as opposed to an individual.

Luternau - my mortgage is definitely a commercial mortgage which PTSB called an "Endowment Residential Business Loan". My rate in April 09 was 3.84 percent and in Jan 2012 will be 6.34 percent. This is a 2.50 percent increase while the ECB rate reduced by .5 percent over the same period.