That's a very good point.
When you allow for the additional 1% cash-back at the end of year 5, you could argue that BOI still has the more attractive fixed rate product for mortgages of €300k+, with an LTV up to 80%.
Which is better - UB 2.6% fixed for 4 years or Bank of Ireland
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When you allow for the additional 1% cash-back at the end of year 5, you could argue that BOI still has the more attractive fixed rate product for mortgages of €300k+, with an LTV up to 80%.
Sometimes I wonder if banks are doing themselves a disservice by coming up with all these different cash back features. If they just quoted a 'clean' rate they'd appear cheaper.
Brendan Burgess
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But you would be still be with Bank of Ireland at the end of the fixed rate period. Bank of Ireland has publicly admitted, nay, boasted, that they are keeping their variable rates high to force people to fix.
That is just too risky. You probably won't move. You might not be able to move.
If the deals are fairly similar you are better off with the likes of AIB or Ulster Bank who have a better record of treating their customers fairly.
Brendan
Or a borrower could just fix again at the end of the initial fixed rate period if that's the best deal on offer.
Who knows who will be offering the best deal in four years' time? I would just concentrate on whatever is the best deal that is available today.
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No one knows. But the fair treatment of customers tends to persist as does the unfair treatment of customers.
You really should deal only with the likes of permanent tsb, BoI and KBC if they are substantially cheaper than AIB or Ulster Bank and if your future is fairly predictable so that you can and will switch after the teaser period is up.
Brendan
I really don't see what the "fair" treatment of customers has to do with choosing between fixed rate mortgage products. The terms of the deal are known in advance - "fairness" doesn't come into it.
BOI have been absolutely transparent about their mortgage strategy. You may not like it but it's hardly "unfair".
Anyway, hopefully we can all agree that it's great to see increasing competition in the mortgage market.
BOI have been absolutely transparent about their mortgage strategy. You may not like it but it's hardly "unfair".
Anyway, hopefully we can all agree that it's great to see increasing competition in the mortgage market.
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Ah, I see your difficulty. Fixed rate periods end and at that stage, you have to switch. Most people, despite their best intentions, don't do so. Many can't do so due to a change in their circumstances.
Brendan
Eh, no, there is no obligation to switch provider at the end of the fixed rate period. You can fix again for a further period (in whole or in part) or stick with the roll off rate.
As an aside, nearly half of all new mortgages in the US last year were refi's. We really will have to change our attitude to switching if we want to see more competition in our mortgage market.
As an aside, nearly half of all new mortgages in the US last year were refi's. We really will have to change our attitude to switching if we want to see more competition in our mortgage market.
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If you are with Bank of Ireland, you will have to switch mortgage providers if you want a variable rate.
Most people like to have a choice of fixed or variable.
Brendan
You do great work here but really seem to have an agenda against BOI.
I found the whole process with them very good after taking mortgage in April 2016. I was able to get them to give me a 3.3% variable after initially taking the 1 year fixed and getting the 2% cash back. I'm currently just biding my time to see what to move to next.
No Brendan, you won't.
Who knows what lender will be offering the best variable rates in 4 years' time?
The fact remains that BOI still arguably offer the best fixed rate deals for €300k+ mortgages at LTVs up to 80%.
Anything else is speculation.
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Brendan Burgess
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Of course I have an agenda. It's called consumer advocacy.
I have been campaigning for lower mortgage rates and for equal treatment of new and existing borrowers.
BoI has publicly boasted that it keeps variable rates high to force people to fix. That is not in the interests of consumers.
I also want lenders to pass on rate cuts automatically to existing customers. Many BoI customers are paying 4.5%. Fair play to you for negotiating 3.3% variable. It's 0.6% below what the lowest rate on their website.
Variable mortgage rates - best buys
I have been campaigning for lower mortgage rates and for equal treatment of new and existing borrowers.
BoI has publicly boasted that it keeps variable rates high to force people to fix. That is not in the interests of consumers.
I also want lenders to pass on rate cuts automatically to existing customers. Many BoI customers are paying 4.5%. Fair play to you for negotiating 3.3% variable. It's 0.6% below what the lowest rate on their website.
Variable mortgage rates - best buys
Says who? That's just your subjective opinion.
Why? All BOI customers have better options.
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Hi Sarenco
This is what you are missing in your legal and theoretical approach.
The fact is that all banks exploit our ignorance and inertia.
The fact is that many of BoI's customers are paying 4.5%.
It's even worse for ptsb customers. They don't have to fix to get a cheaper rate, but only about 25% of them have actually applied for the reduction.
That is why it's in the interest of consumers for banks to be obliged to pass on rate cuts automatically.
Brendan
Brendan
There is nothing theoretical about it - any BOI borrower paying 4.5% could substantially reduce their rate by switching to another provider or by fixing with BOI.
Your proposed rule change (which I think would be unworkable) wouldn't have any impact BOI's SVR.
RedOnion's spreadsheet clearly shows that the BOI fixed-rate offering is materially better value than UB's offering over 5 years, on the basis of the assumptions made. Anything else is just speculation about what might be the position in the future.
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Sarenco
Can you not see that, in practice, most people simply do not switch lenders?
In fact, most simply won't pick up the phone and fix for a year to reduce their rate.
I might agree with your approach if the offer was substantially cheaper either over a 4 year period, or if the rate was much lower and fixed for ten or twenty years.
But taking out a 20 year mortgage or 30 year mortgage with a lender who offers a teaser rate is not a good idea.
For you, BoI might be a better deal. Because you are that rare bird who understands the calculations and are motivated enough to switch after four years. But you are very rare indeed.
For the vast majority of ordinary customers, the correct advice is to avoid any lender which does not pass on rate cuts unless they are substantially cheaper over a fairly medium to long term.
Brendan
J
jjm
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you also have to factor in legal cost into the % if switching banks
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Hi Red Onion
They have the best combination of variable rates and fair treatment of customers.
They charge 3.1% for less than 50% compared to 3.0% for KBC. But they pass on rate cuts automatically. KBC does not pass on rate cuts unless you ask for them, and they reserve the right not to do so.
Brendan
Of course I know that most people never switch mortgage provider - I've been lamenting that fact around here for years!
However, RedOnion's spreadsheet shows the cost of credit over a five year period on the basis of current fixed rates, roll-to rates and cash back offers.
RedOnion doesn't assume that a borrower will switch at the end of an applicable fixed-rate period and doesn't assume that a borrower will fix at a lower rate at the end of the initial fixed rate period.
And it still shows that the BOI fixed-rate product for €300k+ with an LTV of less than 80% comes out materially ahead of the pack over a 5-year period.
The correct advice, in my opinion, is always to borrow at the lowest cost of credit available. "Fairness" doesn't come into it.