Key Post Variable mortgage rates - best buys

Discussion in 'Mortgages and buying and selling homes' started by Brendan Burgess, Feb 12, 2016.

  1. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: May 5, 2017
    Updated 5th May 2017

    EBS is now clearly the Best Buy

    If you are taking out a new mortgage or considering switching, you should apply directly to EBS. It's important that you go directly to EBS as this deal is not available through mortgage brokers.

    Their rates are slightly higher than AIB's, but they give 2% cash back. In other words, if some other lender cuts their rates after a few months, but EBS doesn't, you can switch to the other lender and you do not have to give the cash back.

    upload_2016-8-22_14-18-27.png

    EBS Mortgage Rates


    The EBS 2% Back in Cash mortgage offer

    upload_2017-5-5_7-52-4.png



    All rates are the quoted rate, and not the APR. The difference is not significant.

    Local Authority Home Choice Loan
    AIB Rates
    KBC
    Haven
    Ulster Bank
    ptsb - ptsb also gives a 0.5% discount in the first year which is not in the above tables
    Bank of Ireland

    The only other lender is Pepper, but as they don't publish their rates, it's unlikely that they are good value. However, they may be the only option if you can't get a loan anywhere else due to a bad credit record. They cut their rates in July.

    You should avoid KBC, Bank of Ireland and permanent tsb.

    KBC treats its existing customers with contempt. They cut their rates to attract new business but do not cut rates for existing customers. Today, you are a new customer. Once you draw down the loan you are an existing customer and they will not pass on rate cuts to you automatically. In 2017, they announced that existing customers can apply for new customer rates, but to get them, you must sign terms and conditions acknowledging that they are free to discriminate between new and existing customers.

    While there is no guarantee that AIB will pass on rate cuts, they have done so in the past. Ulster Bank has given a commitment to give existing customers the same rates as new customers.

    Avoid KBC

    Bank of Ireland has admitted that they keep artificially high variable rates to encourage people to fix. They don't appear to quote variable rate for under 80% LTV. So they should be avoided.

    permanent tsb too has very high variable rates on top of a long history of treating customers disgracefully.
     

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    Last edited: May 5, 2017
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  2. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Sep 18, 2016
    Summary of incentives for new customers

    EBS
    Pays 2% cash back - no restrictions
    Haven
    None


    AIB
    Free current account if your mortgage is paid from it

    Ulster Bank
    Pays €1,500

    KBC
    None

    BoI
    2% cash back and another 1% after 5 years

    permanent tsb
    2% cash back but this can be clawed back if you switch within 5 years
    0.5% discount for the first year

    Summary of incentives for switchers

    EBS
    Pays 2% cash back - no restrictions
    Haven
    The Irish Times reports that they pay €2,000 towards legal fees

    AIB
    Pays €2,000 to customers who switch to AIB
    Free current account if your mortgage is paid from it

    Ulster Bank
    Pays €1,500

    KBC Switchers
    €2,000 legal fees - clawback if you switch from them within 3 years
    50% discount on KBC Home Insurance for first 12 months
    BoI
    2% cash back and another 1% after 5 years

    permanent tsb
    2% cash back but this can be clawed back if you switch within 5 years
    0.5% discount for the first year
    Summary of incentives for movers

    EBS
    Pays 2% cash back - no restrictions

    Haven
    None


    AIB
    Free current account if your mortgage is paid from it

    Ulster Bank
    Pays €1,500

    KBC Home Movers
    50% discount on KBC Home Insurance for first 12 months

    BoI
    2% cash back + another 1% after 5 years

    permanent tsb
    2% cash back but this can be clawed back if you switch within 5 years
    0.5% discount for the first year
     
    Last edited: Sep 18, 2016
  3. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Aug 22, 2016
    You should not take out a fixed rate mortgage

    Irish variable mortgage rates and fixed mortgage rates are around 2% higher than they are in the rest of the Eurozone. New lenders are expected to come into the market in the near future. When they do, mortgage rates are expected to fall. So you should not take out a fixed rate mortgage. If you take out a mortgage where the rate is fixed for two years, you will not be able to switch to a new cheaper lender.

    Bank of Ireland in particular will try to encourage you to fix. But don't.

    You do not need to go to a mortgage broker

    Mortgage brokers do not have access to the best deal as the EBS 2% cash back is only available to customers who apply directly.

    Mortgage brokers get paid commission by the lenders. Some pay more than others. So they may well steer you towards the lender which pays them the best commission.

    Only use a mortgage broker if you get turned down by a lender.
     
    Last edited: Aug 22, 2016
  4. Brendan Burgess

    Brendan Burgess Founder

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    Last edited: Aug 22, 2016
    You should look for long-term value and not go for a deal which is attractive in the short-term with the intention of switching later.

    Many people who availed of a first year incentive with the intention of switching after the first year, never got around to switching and ended up paying high rates for the full term of the mortgage. So don't rely on switching.

    Many others found that they could not switch for one of the following reasons:
    • Mortgage arrears
    • Lower income due to new job, or maternity leave or redundancy
    • Change in family circumstances e.g. more kids or separation
     
    Last edited: Aug 22, 2016
  5. Brendan Burgess

    Brendan Burgess Founder

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    The media have reported that a new lender will be in the market within a few months. I understand that they will be charging 2.95% for 80% LTV mortgages and 2.8% for 60% LTV mortgages.

    They will also be allowing borrowers whose LTV has fallen to move to the lower rate.

    They may have a cap on their rates e.g. "The rate will not exceed 5% within 10 years".

    They will also have fixed rates.

    I don't know how often I have to say it. But people should not be signing up to BoI or KBC for 5 years.

    I don't think that they should be fixing either.

    Brendan
     
  6. Brendan Burgess

    Brendan Burgess Founder

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    Folks

    I have updated this thread. Let me know if you spot any errors.

    I have included a quick post on incentives, but I have not had the time to check this out. So I would particularly welcome clarification of the up to date position on incentives. For example, do they apply to all customers or just to switchers?

    Brendan
     
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  7. Brendan Burgess

    Brendan Burgess Founder

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    KBC stays on the Avoid List, as they are not automatically passing on rate cuts to existing customers.

    Brendan
     
  8. ned official

    ned official Registered User

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    But surely they are if u arrange apt with them and get valuation done. only takes 20 min and 120e not so hard
     
  9. Brendan Burgess

    Brendan Burgess Founder

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  10. Bazz71

    Bazz71 New Member

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    Brendan

    i take it you still think EBS are offering the best value at the moment with the cash back offer even though rates are higher than AIB.
    Two thoughts:
    1. do EBS offer reduction in rates to all customers
    2. historically my impression is that the "building societies" such as EBS were not consistently competitive.
    I am with BoI (since March 15) and on a rate of 4.3% on mortgage (LTV 68%) of over 500k and they did not budge on the variable when i threatened to move so i want the next move to be a longer affair!
     
  11. jim

    jim Frequent Poster

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    302
    I disagree with Brendan in that KBC should be avoided. I continue to find them better to deal with than any other Bank - that's just my personal experience but good customer service counts for a lot. They have a very competitive rate for new customers and they are now offering rate reductions to existing customers as long as the LTV has dropped and this is supported by a valuation costing €130. Paying €130 for the valuation is a no brainer if it results in significant monthly savings which I suspect it will for most existing customers. Its also very easy to arrange.

    So I don't see why they should be avoided.

    I would avoid AIB and BOI as they are a nightmare to deal with and arguably are not as competitive as KBC.

    EBS does seem to be the best deal presently.
     
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  12. Gordon Gekko

    Gordon Gekko Frequent Poster

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    The KBC "concession" isn't enough though.

    Everyone's rate should drop when the reference-rate drops...plain and simple.

    Personally I found Ulster Bank great to deal with; 3.1%, rate changes automatically passed on, and €1,500 towards my legal fees.
     
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  13. Markel

    Markel Registered User

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    While I agree with you, the fact is they don't! I think the revised KBC offers look fair - they have the right idea from what I can see (no gimmicks like cashback, just a competitive rate). For those borrowing 80%+ KBC are good value now that they are extending rate drops to new customers (with a small administrative burden thrown in for good measure).
     
  14. Brendan Burgess

    Brendan Burgess Founder

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    Hi Markel

    Have you looked at KBC's terms and conditions?

    They have it set out quite clearly that existing customers are not entitled to new customers' rates. So while today, you can apply for the new customer rate, they may pull that at any time.

    And why should they exploit customers' inertia? Why should a borrower have to be on alert all the time to watch their rates and pay for a valuation every time KBC cuts their rates?

    That is a gimmick. They cannot be trusted. Unless they give a commitment to treat existing customers fairly.

    Brendan
     
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  15. Sarenco

    Sarenco Frequent Poster

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    For the sake of balance, Ulster Bank introduced a new loyalty rate last year which wasn't automatically passed on to eligible existing ("loyalty") customers.

    At this stage, is there a single mortgage lender that doesn't offer some kind of incentive to new customers that isn't also extended to existing customers?

    At least KBC now allow existing borrowers to move LTV brackets - that's certainly not the case with all lenders. I also like the fact that KBC compete on the basis of the rates offered.

    Frankly, I wouldn't "trust" any lender - I doubt many would given our recent history. All banks exploit customer inertia - that's the nature of the beast.
     
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  16. Brendan Burgess

    Brendan Burgess Founder

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    Is this the product for current account holders with a mortgage over €200,000?

    If so, you are technically correct on this one product, and presumably on the €350k + product as well.

    But if Ulster Bank cuts the rate on that product, I presume that they will cut the rate for existing customers as well.

    The difference is that KBC cuts rates for new customers and does not pass them on to any existing customer.

    Brendan
     
  17. Sarenco

    Sarenco Frequent Poster

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    From the EBS website:-

    "EBS is offering home buyers 2% Back in Cash. That’s a nice 2% of the value of your mortgage if you are a first time buyer, mover, or switching your mortgage to EBS. Yep. That's €5,000 on a €250,000 mortgage, Back in Cash. You're welcome."
     
  18. petitverdot

    petitverdot Registered User

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    Excluding cash back gimmicks, excluding Loan to Value ratio offers: For your average mortgage customer looking for a mortgage on the value amount of the actual property; Choosing a standard variable rate lender is still no clearer in my opinion.

    Advice to stay away from KBC as they do not pass on rate reductions to existing customers, however they have one of the lowest Variable rates especially with current account discount, 3.5%

    Advice to go with EBS, however they have also shown in the past not to be a bank who passes on reductions to existing customers when it's big sister AIB did pass them on, Variable rate: 3.7% Yes they offer 2% cash back (e.g.4k on a 200k mortgage) Is 2% really worth it for a short term win for something that you will be paying for avg 30 years without rate cuts passed on? If the thinking is that EBS are the advised ones to go on because you get the 2% and move on to the next bank without penalty then fine, thats short term advice. I imagine people want to know who best to switch to after this?

    Bank of Ireland: Annoyingly allowed to have a high Variable Rate 4.6% to force people onto their Fixed Rate products.

    AIB: Variable: 3.5% passes on to both new and existing customers

    Permanent TSB: Variable Rate 4.3%

    Ulster Bank: Variable 4.3% (3.1% loyalty rate if you switch current account and borrow more than 200k and have <80% LTV)


    So ignoring all these short win cash back offers. With the assumptions not everyone can get lower LTV rates. For the "standard" purchaser looking for the longer term (for now as in next 5 to 8 years) is AIB is the best option? One of the lowest rates and a bank who will pass on reductions makes me think they are the best of the bad lot.
     
  19. Sarenco

    Sarenco Frequent Poster

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    Yeah, unlike KBC and UB, AIB don't allow existing customers to switch to a lower LTV bracket during the term of a loan. That may be a material consideration depending on a borrower's circumstances.
     
  20. gnf_ireland

    gnf_ireland Frequent Poster

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    I also think its worth considering that its likely Irish mortgage holders will have to become a lot more proactive in managing their mortgage over the coming years. The idea of taking a mortgage out with a bank and keeping it with them for the duration is unlikely based on banking behaviour. I foresee a situation where most people will have to switch providers 2-3 times during the lifetime of a mortgage to ensure reasonable rates.


    It is also possible that LTV<50% (or LTV<40%) will be considered the prime lending group and offered the best rates always. Once this magical number has been reached, I believe all mortgage holders should review their mortgage and switch to one which guarantees to pass on all interest rate cuts to their customers.

    Up to this time (LTV<80% - LTV<50%) it is seriously worth considering paying a small premium to be with a bank that allows you move your LTV bands and drops your rate down. It will make a difference over this period of the mortgage.

    When people first take out the mortgage, rate is normally not their first concern, but can they avail of the finance they require. The 2% cashback is not a bad scenario here for most people, and I accept people pay a premium for this. I also think that this cohort should also consider fixing, until they get used to regular monthly mortgage payments etc. Once the customer gets to a LTV<80%, they should then move to avail of better rates.

    Obviously depends on the financial position and maturity of the mortgage holder. Its also worth knowing at what period over the mortgage do you expect to fall into these categories, assuming a modest or flat house price increase. It will allow you determine the 'premium' you are paying.

    Finally, any fixed mortgage that allows a level of over payment (I know BOI allow 10% over payment) is also worth considering, as it does give some increased benefits to the customer. A mortgage that allows a redraw on over payments can also be very attractive to some, if one can be found.