Central Bank putting pressue on PTSB to reduce SVR

[reddanmm]

Piece on todays Indo regarding Central Bank and Regulator putting pressure on PTSB to reduce sky high variable rate. It gives examples of what people are paying v other bank rates. Lets hope the hard work of people on this site is paying off. Here it is Below

ONE of the largest mortgage lenders in the country is coming under intense pressure from the Central Bank to cut its 'sky-high' variable rate.
Permanent TSB has the highest variable rate in the market, even after cutting it by 0.7pc in December.
Its rate of 5.19pc has been sharply criticised by opposition politicians, homeowners and consumer advocates.

Payments on a €300,000 variable-rate mortgage are €300 a month higher than for the same-sized home loan on a tracker rate with Permanent TSB.
The Permanent TSB rate compares with a 3pc variable rate at AIB.

Now the Central Bank has admitted it is applying pressure on lenders charging higher interest rates.
Regulators did not name Permanent TSB but said in a statement yesterday: "We are engaging with specific lenders who appear to have standard variable rates set disproportionately high compared with the cost of funds through our existing powers of suasion."

One borrower with Permanent TSB said he and his wife had bought their house in 2009. They now owe €293,000 on their mortgage.
Their variable rate with Permanent of 5.19pc means the monthly repayments are €1,647.

If the couple had the same mortgage with AIB the monthly repayments would be almost €400 cheaper at €1,264.

Research by regulators released recently showed that the average interest rate on variable rate loans across the market is roughly 2pc higher than the average interest rate on tracker loans.

But some lenders are charging 3pc more on variables than on trackers. Up to the end of 2008, the difference was almost zero between variable and tracker rates, the Central Bank research found.

- Charlie Weston Personal Finance Editor
Irish Independent

 

[Brendan Burgess]

This is a very interesting article.

But why are they putting pressure on PTSB?

They can simply tell the owner of PTSB to reduce the SVR. If they refuse, they can replace the board.

Enda Kenny and Eamon Gilmore were very clear abou their success in getting AIB to pass on ECB interest rate cuts. Why can they not apply the same pressure to PTSB which is 2.2% more expensive than AIB?

Brendan

 

[mouse1]

Brendan,

You have hit the nail on the head, Mr Noonan and the Government have to apply the pressure (like they did before with AIB), because PTSB like AIB is state owned. Let's hope that the Central Bank can do something.