Brendan Burgess
Founder
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The Oireachtas Finance Committee is meeting AIB tomorrow. I had sent in a few questions to the TDs to ask AIB including this one:
Cash back mortgages
Cash back mortgages are used by some lenders to keep the rates for existing customers high. For example, if we compare your two brands – AIB and EBS
With a lowest rate of 2.9% , the only way EBS can get new business is to offer cash back.
But an existing customer of EBS is stuck on this very high rate. So AIB, permanent tsb and BoI uses cash back to keep existing rates very high.
Would it not be better for all customers and all lenders if cash back were banned and lenders were forced to compete on mortgage rates and mortgage rates alone?
Cash back mortgages
Cash back mortgages are used by some lenders to keep the rates for existing customers high. For example, if we compare your two brands – AIB and EBS
AIB – no cashback | EBS – cash back | Additional interest on a €300k mortgage | |
Lowest variable rate <50% LTV | 2.75% | 3.3% | €1,650 |
Lowest fixed rate 3 year fixed | 2.35% | 2.9% | €1,650 |
90% LTV variable | 3.15% | 3.7% | €1,350 |
With a lowest rate of 2.9% , the only way EBS can get new business is to offer cash back.
But an existing customer of EBS is stuck on this very high rate. So AIB, permanent tsb and BoI uses cash back to keep existing rates very high.
Would it not be better for all customers and all lenders if cash back were banned and lenders were forced to compete on mortgage rates and mortgage rates alone?