AIB Where would one find a record of AIB’s cost of funds?

verywhys

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AIB withdrew the tracker for new customers based on the rising cost of funds....what was the rise in cost of funding from 2007 onwards?
 

shelley levine

Registered User
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Thats the one valid point from the banks on trackers. The interbank funding rates in the credit crunch went off the charts and lost any correlation with the ecb rate. And that’s if you could get funds. So new business tracker mortgages became a non runner. Honoring commitments to your existing book was then the issue for banks and they tried every trick in the book to reduce those liabilities.

I don’t you’ll find interbank rates for a given period published anywhere but aibs annual reports for the period might shine a light
 
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Brendan Burgess

Founder
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You will find it difficult to get AIB's specific cost of funds as it's based on their entire balance sheet. Some banks do publish it intermittently in various presentations.

Presumably you can find the interbank funding rate somewhere.

I am not sure that it's that relevant to AIB's case.

AIB was free to change the prevailing tracker margin at any time to reflect the higher cost of funds. The fact is that it did not do so. My argument is that their margin prevailed until they changed it.

Brendan
 

verywhys

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That's true Brendan.....just trying to find holes in their 7.9% tracker rate argument but it really is irrelevant....thanks for that.
 

Bronte

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You will find it difficult to get AIB's specific cost of funds as it's based on their entire balance sheet. Some banks do publish it intermittently in various presentations.
One of my property loans is based on cost of funds (plus margin) and when it was variable (now fixed) they sent me statements outlining that cost for each two weekly period if I recall correctly. It was all pretty low.
 

verywhys

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Thanks for that Bronte.....if you don't mind me asking....when did you take out the loan and if the cost of funds varied much throughout the lifetime of the loan?

i wonder if the cost of funds used for property loans like your own was published or made available anywhere to the public?
 

Bronte

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It was around 2006. I'm currently on a fixed cost of funds of 1.12 (plus my margin) which I fixed about 3 years ago I think.

In October 2012 I was emailing about rates because of fears in the markets and was told:

current COF of 1.20% + margin )

3 year: Cof 1.0% + % = % Repayments of € pm over fixed term

5 year: Cof 1.5% + 0% = % Repayments of € pm over fixed term


(I have deleted my margin and the repayments for privacy reasons.)

The rate changed every two weeks I think it was but I remember worrying about it but it actually never went much up. Maybe it hit 2%. I'd have to look in my mortgage files to see.

I pay less than 3% and I think I never paid more than 3%.
 
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Bronte

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April 2014 I again enquired:

The all in rate at present is % (current COF of 1.02% + margin ... current monthly repayments being made of € and a term remaining of ... years ....months.

Indicative Fixed rates as requested: (Max we can quote is 5 years)

3 year: - Cof 0.9% + = % Repayments of € pm over fixed term

5 year: - Cof 1.25%+ = % Repayments of € pm over fixed term
 

Bronte

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Then all of a sudden bank decided to get strict with me and look into my finances annually. This was about 5 years ago, and about a decade after I got the loan. (They seemed to have woken up shall we say. Compared to when I initially borrowed and they couldn'n wait to give me the money) So they wanted to know which properties I had, rent roll etc, and whether I was tax complaint. I just did rough figures on an email and that was it.

  • Details of assets/Liabilities including rent roll from each of the properties.
  • Income details for both of you (P60 equivalent or up to date financials if you are self employed)
  • Confirmation of tax affairs.

Didn't even have to supply P60's as we don't have them. Just explained as I said by email and then the bank has some kind of meeting and that's it.
 

verywhys

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Thanks again Bronte.....that is all very interesting and i think AIB really need to be challenged on how they are calculating the rate of 7.9%.
 

verywhys

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No I didn’t find much available to the public....AIB feel that they have this covered from what I can see but I think what Brendan has said about AIB’s calculations being irrelevant is spot on....the reality is a prevailing rate did exist when 6000 AIB customers came off a fixed rate...AIB have made many mistakes with their contracts and with how they withdrew the tracker for new customers only...AIB will need to accept their mistakes if they want to move past this tracker scandal otherwise I don’t see this going away for a long time
 

tnegun

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I was thinking it could be used to further demonstrate that the 7.9% was manufactured in the banks favour
 
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