PTSB reduces mortgage rates for existing customers

07.00am Wednesday 1st July 2015. permanent tsb bank is to allow over 70,000 existing homeloan customers on Standard Variable Rate Mortgages of 4.5% to move to new mortgage interest rates which will start from as little as 3.7%**.

The new rates will vary depending on the amount owed by customers and the current value of their home. The highest rate charged (for customers who are in negative equity or whose mortgage is equal to 91% or more of the value of their home) will be 4.3%. This is 0.2% less than the current SVR.

The move will mean an end to the traditional SVR mortgage for homeloan customers that was based on a one-size-fits-all approach where one variable interest rate applied to customers irrespective of how much equity they had in the property.

The interest rates will be based on the following pricing bands.

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Customers can start the switch process in August and the new Managed Variable Rate (MVR) pricing policy will be available from September. Customers will be required to apply to move to the new rates and the bank will pay for a valuation of their home to support their application. There is no credit assessment required of customers as this is on an existing loan.

The move could lead to very significant savings for existing customers. If the amount owed on a home is less than 50% of the value of the home today, the customer will be able to reduce their interest rate from today’s SVR of 4.5% to the new MVR of 3.7% (a cut of 0.8%).

Customers currently on fixed rates will be able to elect to move to an MVR mortgage as one of their options at the maturity of their fixed rate (or they could move to an MVR mortgage sooner if they first break from their fixed rate subject to paying a breakage fee and other terms and conditions that might apply to their fixed rate).

Speaking today Ger Mitchell, Director of Lending, said the move would effectively mean the end of the SVR rate for tens of thousands of homeloan mortgage customers; “this is the biggest innovation we’ve undertaken in mortgage pricing for existing customers ever. It marks a fundamental shift in the way we treat our existing customers and will allow us to offer existing customers some of the most competitive mortgage rates in the Irish market.”

In the coming weeks permanent tsb will write to over 70,000 homeloan customers on variable rates to advise them of the new policy and the steps they need to take to avail of the initiative.

Ger Mitchell also confirmed that the Group would unveil a series of Discounted MVR rates for new business next week. He said; “As part of our mortgage drive, we will offer new customers discounts on our MVR rates for up to 12 months to help them as they take on a new mortgage.”

Footnote:
The new pricing model is available to homeloan customers only. It is not available for Buy To Let (BTL) customers.
 
I welcome the principle that existing customers will be treated the same as new customers. This is one of the fundamental demands of the Fair Mortgage Rates Campaign.

This is good news for those on low Loan to Values. Someone with an LTV of 60% will see their rate reduced to 3.8%.

But someone in negative equity or with an LTV greater than 90% will still be paying 4.3% and can do absolutely nothing about it.

Compare and contrast with Bank of Ireland

They still treat new customers better than existing customers. Existing customers pay 4.5% variable while new customers can get rates as low as 3.9% variable. New customers can fix for just one year, whereas existing customers must fix for two years to get a lower rate.

If I were in deep negative equity, which lender would I prefer to be a customer of? Clearly Bank of Ireland. I will be paying ptsb a variable rate of 4.3% after these cuts, whereas I can get a fixed rate of 3.75% from Bank of Ireland, as long as I fix for two years.

KBC is something similar. The SVRs remain high, but I can fix for lower rates.
 
I can’t see it mentioned but am wondering will one be able to move down the Managed Variable Rates as their LTV decreases over the years, or if your current LTV is say the higher bracket, will you remain there for the entire term ?
 
I'm guessing this would not be a good move for those hoping to get their tracker back from PTSB. Equally it's possible they've announced this now in the hopes that some people will avail of it before they make the official offers.
 
As a customer in negative equity with ptsb a reduction from 4.5% to 4.3% is deeply disappointing. No option to fix. No option to move banks. A very underwhelming outcome. I wonder how Minister Noonan views it?
 
Have to agree with you bdecuc..this is simply not enough. It's a big kick in the teeth for those in NE. I am outraged today.
I was in BOI this morning and when speaking with one of their team the topic of switching mortgage came up. He took some numbers and although I advised I was in NE he said they're may still be an option to switch to their fixed rate which I believe is about 3.7% - 3.9%

@ AAM_User..if anyone is waiting to get their tracker rate back then I am assuming they are the ones affected by the central bank investigation and therefore I think it would be crazy to accept this offer even if your LTV is low and the best you can get is 3.7%. I doubt the bank are thinking like that but then again some people could fall for it I guess.
 
Still waiting with baited breath for the letter from PTSB on this. They would put you off mortgages for life.
 
The rates seem to be effective from September so still plenty of time for them to write to borrowers?

Oh - and as usual the banks throw in yet more jargon (MVR) to confuse the average punter. :rolleyes:
 
As a constituent of Minister Howlin's, I wrote to him a couple of weeks ago following PTSB's announcement of its 'MVRs' at the start of the month. I asked for Min. Howlin's views on NE customers like myself seeing a miserly rate reduction of 4.5% to 4.3%. I described how people in my circumstances have no options to switch to another bank and have no options to switch to a cheaper fixed rate. In other words we have no options.

I got a letter back to say that 'the Minister for Finance undertook, in the event of insufficient progress on mortgage reductions by September, to consider imposing a penal bank levy in the Budget or bringing forward legislation for the Central Bank to regulate interest'. Min. Howling said that in the meantime he had asked PTSB for an explanation of its response to Min. Noonan's request for rate reductions, citing my example, and he'd keep me informed of any reply he received.

The Minister forwarded on PTSB's reply today. I've set it out below for info. There's nothing in it that lots of people who follow this campaign won't already know to be honest...

Dear Minister,

Thank you for your recent correspondence on behalf of a constituent.

The rate reduction which your constituent refers to, is part of a very significant change which the bank has made to the pricing model it operates for existing home loan mortgage customers.

This change was announced earlier this month and will lead to reductions in monthly interest rates of as much as 0.8% for many of our existing borrowers. It will also mark the first time in the Irish market that existing, as well as new home loan mortgage customers, will be able to access more competitive rates of interest depending on the size of the loan relative to the current value of their home. As such, it marks an end of the so-called "standard variable rate" ('SVR') mortgage for our home loan customers.

In launching this new model, we were very conscious that all existing borrowers should be able to benefit from its introduction. With that in mind we ensured that even home loan borrowers in negative equity could avail of a reduction in their interest rate of 0.2%.

We would have been delighted to have been able to ensure a higher reduction for customers in negative equity. Unfortunately, that is not possible both given the relatively high cost of funds which we face at present and the higher risk of those in negative equity (in simple terms, any change in circumstances would mean a higher probability of the taxpayer losing capital over and above the value of the home).

In terms of the bank's cost of funds, many commentators contrast the mortgage rates offered by banks in Ireland with the current ECB rate. However, we source a reducing and small portion of our funding from the ECB (as agreed with both the Troika and the Central Bank) and our blended cost of funds is significantly higher than the quoted ECB rate.

In addition, we have to account for the large number of our customers who are not in a position to make their repayments at present. Unfortunately, this too adds to the costs faced by performing customers.

I hope this letter provides some clarity on our pricing model and the extent to which we are trying to be fair to existing as well as new customers.

I can understand that my explanation will not be of much consolation to your constituent; however, I do hope that you will accept that we will continue to try to drive our funding costs down over time and share the benefits of that with all our borrowers, existing and new.

Kind regards,

Jeremy Masding
Group Chief Executive Officer
 
Hi - has anybody had the change processed yet? Is there a backlog? (only sent my valuation yesterday) - Thanks
 
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