# Which is the best lender to take out a mortgage with? - Discussion



## Brendan Burgess (10 Sep 2015)

shweeney said:


> note - PTSB give a .5% discount to new customers for the first year, so their lowest rate is actually 3.2% - there's nothing to stop you taking their 1K legal fee offer and then leaving after a year if there are better variable rates available elsewhere.



Hi sh

Interesting point and I have incorporated it in the table. 

You can't rely on switching to another lender after one year.  You should be able to, but lending criteria change.  People change jobs,etc., so you might not be able to move.

After you allow for the 0.5% discount, it's only marginally cheaper than AIB or Ulster Bank, so I think that they remain the Best Buys.

Brendan


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## Páid (11 Sep 2015)

I'm just wondering why don't you include EBS in your table?


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## Brendan Burgess (11 Sep 2015)

AIB and EBS are the same bank, as is Haven.


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## Sarenco (11 Sep 2015)

From 1 October 2015, EBS LTV variable rates will be 5bps lower than AIB's equivalent rates.

http://www.askaboutmoney.com/threads/aib-cuts-all-rates-by-0-25-svr-now-3-65.195210/

I would suggest that it would be more accurate to say that AIB's current policy is to apply the same rates for existing borrowers to the rates offered to new borrowers with equivalent LTVs.  There can obviously be no assurance that this policy will be continued indefinitely.


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## Brendan Burgess (11 Sep 2015)

Sarenco said:


> I would suggest that it would be more accurate to say that AIB's current policy is to apply the same rates for existing borrowers to the rates offered to new borrowers with equivalent LTVs. There can obviously be no assurance that this policy will be continued indefinitely.



When AIB's policy changes, I will change the post.   Likewise when Bank of Ireland or KBC changes their policy, I will change the post.

Brendan


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## Sarenco (11 Sep 2015)

Brendan Burgess said:


> When AIB's policy changes, I will change the post.   Likewise when Bank of Ireland or KBC changes their policy, I will change the post.
> 
> Brendan



Fair enough - I suppose it's clear that these are AIB's current pricing policies/practices and not contractual mortgage terms.

I would be interested to know if anybody can see a good reason for choosing AIB over EBS (given the fact that EBS offer a 5bps discount to AIB's LTV rates)?

As an aside, it's great to see some competition back in the mortgage market again.


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## Páid (12 Sep 2015)

Brendan Burgess said:


> AIB and EBS are the same bank, as is Haven.


I understand that but their rates are different.


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## Brendan Burgess (12 Sep 2015)

The difference is not significant enough- .05% -to mention give them three separate columns at the top of the table. 

Brendan


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## shweeney (14 Sep 2015)

Brendan Burgess said:


> *Best buy under 60% - Ulster Bank *
> Although 0.1% above KBC's rate,they pass on rate cuts to existing customers.



Do we have confirmation that UB pass on reductions to existing customers - their recent reductions were structured as "lifetime" discounts from the SVR, but they haven't actually reduced the SVR.  Are those discounts available to existing customers - not clear from their website.  If they increase the discount to win more business, I'd imagine that anyone that takes out a mortgage with them now will be stuck on whatever discount they signed up to.

All the banks seem to be engaged in a dance of deception - special offers, discounts, managed rates etc without actually reducing their _Standard_ rate.


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## Brendan Burgess (14 Sep 2015)

Hi Sh

Ulster Bank does not discriminate between new and existing customers.


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## shweeney (14 Sep 2015)

Brendan Burgess said:


> Hi Sh
> 
> Ulster Bank does not discriminate between new and existing customers.



so existing customer can definitely get the 3.5% rate (assuming they're <60% LTV)?  Not really clear from their website or press releases.


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## Phil_space (6 Oct 2015)

Brendan Burgess said:


> Hi Sh
> 
> Ulster Bank does not discriminate between new and existing customers.



Hi Brendan, In relation to your post above, I took out a mortgage with Ulster Bank in early Sept 2015, with an LTV of c.75% and got their Discounted Variable Product (SVR - 0.4%) at 3.9%. My first payment is due in the next couple of days so I contacted them last week to determine that I would automatically get the new rate (SVR - 0.6%) announced in mid September, a week after I received my funds. I received the following email from my branch:

_"I have just checked with our mortgage team in Uk an they have confirmed that our system will not automatically change to the 3.70% which is what you do qualify for currently we have to request a change and a rate sheet to be issued to you.
I have ordered the rate sheet so when you get this in the post you will have to select the 3.70% SVR rate and sign and then return it back to them and then the rate will be changed.
Your mortgage payment on the xxx is going to go out though on the 3.90% rate they advised.
The rate sheet should be with you in about 10 working days"._

It seems odd that I would have to apply for a rate change when I remain on the same product and as the response says I 'qualify' for it. With my previous lender any rate changes were automatically applied. Also, UB did not notify me, in September when the rate changed, that in order to get the lower rate I would have to sign this 'rate sheet'.

Am I missing something here or should the new rate not automatically apply as I remain on the same Discounted Variable product?


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## Brendan Burgess (6 Oct 2015)

Hi Phil

That sounds like a systems problem.  UB has a creaking computer system, so they just can't do it automatically. Just sign the rate sheet. 

Brendan


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## Phil_space (6 Oct 2015)

Thanks Brendan, will do.

Phil


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## Deano (13 Oct 2015)

Sorry guys, please forgive my ignorance here but I simply do not get why AIB is better than KBC? Does this mean that they will pass on further ECB cuts? Is this not meaningless if the ECB rate is already at 0.05%??

*Best buy under 50% - AIB *
Although 0.1% above KBC's rate,they pass on rate cuts to existing customers.


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## Brendan Burgess (13 Oct 2015)

Hi Deano

Good question. 

It's not really about the ECB rate. 

Although the ECB rate has not reduced for some time, Irish lenders have cut rates for new business. 

However, they are under no obligation to cut rates for existing business.  So if you are  a customer of KBC with an LTV of less than 50% you are paying 4.15%.  

AIB did cut the rates for existing business as well as for new business. 

I expect new business rates to fall further in the coming months. 

I expect that AIB will pass on similar cuts to existing customers. I don't expect KBC to do so.

Brendan


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## Deano (13 Oct 2015)

OK Brendan, thank you. This would be for new business so I guess for me that KBC would be better.


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## SS expert (13 Oct 2015)

As soon as you get your mortgage with KBC you are an existing customer. you are not eligible for any further cuts to the rate you get when you sign. KBC won't pass on any better rates. in X months time if AIB reduce their rates by 0.2% you will be better off. Stay away from KBC...


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## pauric (14 Oct 2015)

Hi folks, I'm caught up between the UB and BOI rates. My situation is LTV of 80% and a mortgage of 392,000. I'm trying to calculate the cheapest one to go with, I will base both over 5 years. I will also assume (incorrectly I'm sure but need to base it on some assumption) that the VR will stay the same or at least they will rise/fall together. UB seem to be more favourable here as they pass on rates to existing customer, BOI I believe don't?

*Option 1:* Go with a variable rate, 3.35% with UB and 1,500 back in legal fees. 4.2% with BOI and 2% cashback. I've calculated the repayments to be as follows:

UB, 5 years at €1,586.22/month so over 60 months this is €95,172.96 - €1500 legal fees = *€93,672.96*
BOI, 5 years at €1,783.01/month so over 60 months this is €106,980.83 - €7,840.00 2% cashback = *€99,140.83*

Clearly UB are the winners here.

*Option 2:* Go with a 5 year fixed rate. 3.6% with UB and 1,500 back in legal fees. 3.8% with BOI and 2% cashback. I've calculated the repayments to be as follows:
UB, 5 years at €1,642.89/month so over 60 months this is €98,573.58 - €1500 legal fees = *€97,073.58*
BOI, 5 years at €1,688.97/month so over 60 months this is €101,337.97 - €7,840.00 2% cashback = *€93,497.97*

Now we flip to BOI winning and BOI winning overall compared to option 1 if UB don't revise their rates downwards during the 5 years.

*Option 3:* This is where I am unsure, I could go with a UB 3year rate of 3.2% and BOI rate of 3.6% but then what do I assume I will pay for the remaining 2 years while I would have to wait for the BOI clawback to finish.

Is anyone able to verify that my calculations are correct?
The 3.35% VR with UB seems to be the best on the market currently, does anyone know if they have a rate cut in the future will this special rate also get a cut? It's their high value customer rate when you borrow more than 250k and stay within 3.5 times your annual salary.

Is there any other banks I should be looking at? UB seem to be the best across the board at the moment as far as I can see.


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## Brendan Burgess (14 Oct 2015)

I don't think that anyone who has a choice should fix their rate. I have posted about it in the follow up post here: 



So it seems to me that UB at 3.35% is the best choice for you. 

Brendan


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## Brendan Burgess (14 Oct 2015)

Brendan Burgess said:


> *Inducements paid by lenders *
> 
> *AIB: *
> Loan approval lasts for 12 months
> ...



I have inserted this information in the second post in 

Have I omitted anything?  I had not realised that the KBC €2,000 is for switchers only and not for first-time buyers. 

Are there other factors which would be worth considering? The AIB loan approval lasts for 12 months - how long does the approval from the other lenders last for?


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## Generic Name (14 Oct 2015)

Hi Brendan,

Take Pauric's situation above but with a mortgage amount of >€450k and BOI offering 3.7% variable to get the business, would you still go with UB's 3.35% variable?


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## Brendan Burgess (14 Oct 2015)

Hi GN

BoI is charging 4.2% for 80% LTV not 3.7%.

The only way I would do business with BoI or KBC is if they gave tracker rates. They are not to be trusted. 

If BoI gives 3.7% on a tracker with 2% cash back, it would be a hard call. 

I expect that people borrowing that amount of money will have more options in the New Year. 

Brendan


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## Generic Name (14 Oct 2015)

Hi Brendan,

BOI offered me 3.7% variable after I informed them that a.) I did not wish to fix and b.) that I was eligible for UB's 3.35% variable. I haven't yet confirmed if this represented a 0.8% lifetime reduction on their SVR (currently 4.5%) or what, if anything, it was tied to. I'm currently in the process of switching from KBC.

GN


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## Brendan Burgess (14 Oct 2015)

That is very interesting. 

Ulster Bank will give you 3.35% . BoI will give you 3.7%.  BoI is currently dearer by 0.35%. If that held for the full 5 years, then, you would pay an extra 1.75%. But you are saving 2% up front. 

I would not trust Bank of Ireland to keep you on that rate. Are you sure it's not a fixed rate? 

Get it in writing from them about how the rate will be determined in future, but given the likely reduction in Irish mortgage rates, I would not tie myself into any financial institution for 5 years. 

Brendan


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## pauric (14 Oct 2015)

Thanks for the reply Brendan, I'm at the stage now where I have booking deposit down but wouldn't actually move into the new home until February/March next year which is when the mortgage would draw down. It would be at that stage I guess when I would have to decide on what rates to go with I think. 

Does anyone know can I sign with the solicitor this month and still bring the 2-3 mortgage options with me when rates may drop further in the new year and my options on rates would remain open.


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## Brendan Burgess (15 Oct 2015)

If you have mortgage approval, it usually lasts 6 months. So, yes, you can sign the contract now as long as you have mortgage approval from one lender.  

By February or March, the landscape may have changed and the above advice may  not be appropriate. 

Brendan


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## Officelady1 (15 Oct 2015)

Hi all, I posted about this separately but hoping for a response here as I am under pressure to decide on rates ( due to close next week). We are borrowing at 74% LTV with PTSB. Our letter of offer is for the MVR which is 3.5% for 1 year, currently 4% after that. It seems to make no sense to take this over their 1 year fixed which is 3.29% and then rolls off to MVR but I'm unsure as to whether to fix for longer than that ( 2 or 3 years at 3.6%). We will not be ideal candidates for switching after one year as we have another mortgage but not the worst candidates either as we have good income. 
My question is, should I fix for longer than 1 year or stick with one year fixed and aim to switch after that if the MVR is still 4%?


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## Generic Name (15 Oct 2015)

Brendan Burgess said:


> That is very interesting.
> 
> Ulster Bank will give you 3.35% . BoI will give you 3.7%.  BoI is currently dearer by 0.35%. If that held for the full 5 years, then, you would pay an extra 1.75%. But you are saving 2% up front.
> 
> ...



Informed over the phone that the 3.7% variable rate offered is a 0.5% discount on their 80% LTV rate, currently 4.2%. It will rise/fall with this rate in the future. If I initially take it but subsequently fix it will no longer be available to me post fixed period.

Re saving 2% up front, the €1,500 from UB also represents a saving up front which cancels any advantage the 2% offers over a 5 year period vs UB, assuming rates didn't change.


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## kennyb3 (22 Oct 2015)

Brendan Burgess said:


> AIB does not allow existing customers to avail of lower Loan to Value rates if the customer's LTV falls. However, they do pass on rate cuts, so they are a Best Buy.



I got a valuation done by one of their panel - sent it into them and they put me on a lower LTV rate as a result. that was about 6 months ago - absolutely no issue.


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## Brendan Burgess (22 Oct 2015)

Hi Kenny

Were you on an SVR or an LTV mortgage initially? 

Brendan


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## Anna_R_N (23 Oct 2015)

Hi Brendan, thanks so much for this post, it has been hugely informative. We are First Time Buyers, about to purchase a home worth 365000, with a LTV value mortgage of about 49% (181000), and we're going with a variable rate. We've been to a mortgage advisor, and are probably going to go with AIB, so I as glad to see that they are your recommended buy for mortgages of less than 50% LTV. Can I just ask why you don't recommend PTSB, as their rate seems lower? I understand your feedback about BOI and KBC not passing on reduced rates/treating customers badly, but I don't see any negative feedback about PTSB on this thread, so was wondering why they aren't recommend if their rate is lower?

Also, do you know if it's possible to negotiate in terms of the incentives offered - eg instead of no bank fees, request legal fees covered etc.  Thanks a million.


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## Brendan Burgess (23 Oct 2015)

The permanent tsb rate is 3.7% which is 0.35% higher than AIB. You get a short-term saving as a new customer but it's not worth the long-term cost.  Although you should be able to change after a year, you might not be for a number of reasons. Or you might just not get around to it. Pick the lender which is most likely to offer the best long-term value.

ptsb is in a very difficult financial position.  It has a big book of trackers and it has in the past and will probably continue to exploit its existing customers - probably because it has no choice but to do so. 

For whatever reason, it does not offer its existing customers the option to fix.  While I advise against fixing now, it may become advisable if mortgage rates fall to fair rates. 


AIB has usually been the first to cut rates and they have cut faster than others.


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## Anna_R_N (23 Oct 2015)

Brilliant, thanks so much Brendan, I really appreciate it.


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## firstmortgage (12 Dec 2015)

Hi Brendan,

Thank you for the really informative post. I am borrowing 240k, about 79% LTV, 25 years and my first choice was AIB. Then somehow I calculated better rates from KBC, so currently waiting their offer. However after reading your post, it seems that if I go with LTV rate, AIB are the better lender here long term. Does it make any sense to explore 3 years fixed rate with them, what are the options afterwards - SVR? Thanks a million!


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## jakfrost (17 Dec 2015)

Brendan,

Has your opinion on whether to fix or not changed given this morning's announcement with respect to both the interest rate rises in the U.S., and the announcements from Michael Noonan in relation to AIB? Do AIB still remain as a 'best buy' or is it too early to say?
I ask as I'm currently trying to decide as a new customer on whether to accept the current variable rate on offer or fix for a year. I have approval from AIB, KBC, and PTSB but on the advice of many on this forum am edging towards AIB.

Many thanks


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## Brendan Burgess (17 Dec 2015)

My view is that as the market normalises,  there is a good chance that a new entrant will come into the Irish market and bring down rates for those who are able to move. So I strongly recommend against fixing for those who can move.

I can't forecast the future, and the Irish banks might double their rates tomorrow morning and it seems that the government doesn't really care.


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## Berneseduke (4 Jan 2016)

Just wondering if this statement is still true in the second post on this thread:

"AIB:
Loan approval lasts for 12 months
No current account fees for the account from which you pay your mortgage. ( orth about €80 per year.)"

I am currently paying fees on the current account that the mortgage is drawn from.


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## Bolter (9 Jan 2016)

Noting the new Ptsb deal -giving 6000 euro cash back to switchers, do people still think ulsterbank is best deal for those with equity of > 50% in their home?


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## Brendan Burgess (9 Jan 2016)

leanbh

The details have not been announced yet. 

But unless you can switch from ptsb without repaying the 2%, they should be avoided. 

Brendan


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## Bolter (9 Jan 2016)

Thanks Brendan. Am inclined to agree.


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## Jackman (23 Jan 2016)

I am in the process of switching mortgage at the moment so trying to weigh up the different options..

I was about to go with KBC, but I think they are in the mode of attracting new current accounts and mortgages. I am very wary that they will change tack once they are out of that phase so to speak. It's a very old trick. I'm also wary of their cashback for the same reason... that would be clawed back very easily through a slightly higher svr.

The best buys on paper at the moment do seem to be AIB or Ulster Bank but will they continue to pass on interest rate cuts? It's impossible to know 5 or 10 years out. Unless it's in the contract you are still at the mercy of the svr.

AIB will be sold to private investors and there is also talk of Ulster being sold. In that case what will their strategy be and how will they treat their customers? It seems the only thing to do in that case is to switch again at that stage. If only there was a reasonable fixed tracker for 20 years like you have said before Brendan in the style of german or US mortgages I would take in in a heartbeat

(Ps very helpful thread for comparing what's on offer at the moment)


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## Sarenco (3 Feb 2016)

Berneseduke said:


> Just wondering if this statement is still true in the second post on this thread:
> 
> "AIB:
> Loan approval lasts for 12 months
> ...



https://group.aib.ie/content/dam/aib/group/Docs/Press Releases/2015/AIB-extends-no-fees-banking-to-mortgage-customers-FINAL.pdf

Apparently the current account fee waiver should be have been applicable to existing AIB mortgage customers from last December.  Are you still being charged fees?


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## bbari1 (8 Feb 2016)

Hello guys,

The price of the house I am buying is €350K and I have a loan approval from AIB for €230K - no broker involved. This approval is to expire in May.

Today I spoke with a broker and he said that KBC are the cheapest (3.30% v 3.55% with AIB). This is after the 0.20% discount when you pay mortgage from KBC a/c. As Brendan have highlighted, I asked the broker if I will get benefit of future cuts, the agent thinks that this has changed *recently* i.e. KBC WILL pass on the interest rates reduction to the existing customers too. He is to confirm that will me in the morning. 

If KBC don't pass on the benefit of reduced rate - should I stick with AIB? 
What if the broker is correct, should I go with KBC ? 

TIA


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## gnf_ireland (8 Feb 2016)

Maybe KBC's policy has changed but any time I have raised this in the past they have been pretty clear - feel free to switch and come back to us again

Please do update us on what your broker says

In terms of KBC v AIB - it depends on your personal circumstances are and what you believe. Logically it would make sense to go with AIB if you believe they will continue to drop their rates. If not, KBC are lower !


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## bbari1 (8 Feb 2016)

Thank you. Sure - I will update you guys as soon as I will hear back from the broker.

if KBC do pass on the rate cuts to the existing customers then its no brainer to be with KBC. or is there anything else I need to watch out ?

with regards to what do I believe, I haven't a clue if the the rates will drop/raise in the future!


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## bbari1 (9 Feb 2016)

This is what the broker said,

_"Yes new LTV variable rate customers will get benefit of any more future rates cuts- they also changed it so that those taking fixed rates initially (bar the 1 year fixed for some reason) revert to those lower tiered LTV variables when coming OFF a fixed rate option instead of higher roll off rates that applied formerly."
_
I have requested this to be in writing (from KBC).


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## SS expert (9 Feb 2016)

I might sound pedantic build I would want a definition of "future rates cuts"


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## bbari1 (9 Feb 2016)

Sorry if its a stupid question but are there few definitions?


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## SS expert (9 Feb 2016)

is it linked to ecb? or all kbc rate cuts across the board?


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## bbari1 (9 Feb 2016)

I'll ask the question. AIB pass on the rate cuts to the existing customers - what way they work ?


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## Brendan Burgess (9 Feb 2016)

SS expert said:


> I might sound pedantic build I would want a definition of "future rates cuts"



You are not pedantic at all. KBC is very clever in its wording and has tricked lots of people out of trackers. 

I would want this wording from KBC. 

"We will always give you the best rate on offer to new customers for your existing Loan to Value" 

Brendan


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## SS expert (9 Feb 2016)

I asked KBC this a few weeks ago, and they would not budge... if they have changed their policy fair enough.
I would be very wary going with KBC... This is the first I have heard that they are going to treat new and existing customers the same


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## bbari1 (9 Feb 2016)

Thanks Brendan - I will try getting that done.

SS - As per the broker, this is the new policy which isn't just publicised yet hence I have requested this in writing.


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## gnf_ireland (9 Feb 2016)

I would agree with all of that re KBC. I have also tried to no avail to get the new rate on my mortgage. 

I am definitely not adverse to switching again in the near future, it is currently not financially practical for me to do so at 3.35% rates.

However, if Frank Money is targeting conservative lending at competitive rates I will definitely evaluate the proposal when it comes out, if they are given approval to operate!

I do believe KBC will have to do something in the event Frank Money takes off. A lot of the switching business in the last 12 months will potentially switch out again if Frank are in the region of 0.75% cheaper (maybe less) than KBC. It will be interesting to see what they do in that case, especially if their less risky asset book is being hit.


However, I would have no faith in KBC to pass on interest rate cuts to existing customers unless it was explicitly written into my mortgage agreement


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## gnf_ireland (9 Feb 2016)

bbari1 said:


> SS - As per the broker, this is the new policy which isn't just publicised yet hence I have requested this in writing.



Just make sure its explicitly written into any mortgage agreement and is not just some email between you and the broker !


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## bbari1 (9 Feb 2016)

gnf_ireland said:


> Just make sure its explicitly written into any mortgage agreement and is not just some email between you and the broker !



Noted - I am not going by the email from the broker. The broker knows that I have an approval from AIB already and that I won't go ahead with KBC unless he gets this in writing from KBC.


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## Sarenco (9 Feb 2016)

gnf_ireland said:


> The only reason I am not switching at the moment is I am keen  to see what Frank Money come up with, if permitted !



To be fair gnf, you told us a few days ago that it wasn't worth your while switching at the moment:-

http://www.askaboutmoney.com/threads/kbc-existing-borrowers-have-you-considered-switching.197560/

It certainly would be a significant change in policy for KBC to commit to apply new customer rates to existing customers.  I have my doubts.


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## Brendan Burgess (10 Feb 2016)

Sarenco said:


> It certainly would be a significant change in policy for KBC to commit to apply new customer rates to existing customers.  I have my doubts.



ptsb changed their policy after public pressure. 

What about KBC's latest ad which says 

"Just the lowest monthly mortgage repayments over the term of your new mortgage with a KBC current account" 

Does that give bari1 and other *New *customers of KBC any comfort? 

Brendan


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## gnf_ireland (10 Feb 2016)

Apologies @Sarenco I was in a rush last night and should have chosen my words a bit more carefully. I have edited the above post to reflect what I meant to say. Sincere apologies to anyone who felt misinformed by it. 

However we can both agree on the main element of the discussion - I.e. Whether KBC have changed policy to allow existing customers avail of new product rates, which we are both doubtful of


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## gnf_ireland (10 Feb 2016)

"Just the lowest monthly mortgage repayments over the term of your new mortgage with a KBC current account"

What exactly does this mean? Are they going to rate match what any other bank is willing to offer in the future over the next 25-35 years ? LIke most things, the devil is in the detail


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## Brendan Burgess (10 Feb 2016)

I am not sure that the devil is in the detail of this one.

It's a prominent ad with no asterisks or qualifiers. If you do take out a KBC mortgage based on this ad I think you will have a very good claim that you are entitled to the lowest mortgage repayments over the term of your mortgage


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## bbari1 (10 Feb 2016)

I just called the KBC customer services, the lady on the phone said that the future reductions are for the NEW customers only and not applied to the existing customers. I am sure customer services would have been briefed if there was a new policy. I will wait for the brokers to get back to me on this. will keep you guys posted.


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## bbari1 (10 Feb 2016)

This is what the broker said,

_"Well it seems there is NO guarantee you will get a future cut on the 3.30% rate that you would start out on if that rate was subsequently cut to new entrants later in the year- entirely at the discretion of the bank as you can see. It’s usually the case with all – at their discretion- but did you say AIB have confirmed to you that you would definitely be getting any future rate cut that would apply to their new business entrants?"_

Does the AIB guarantee that they will pass on the future cuts to the existing customer ?


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## Sarenco (10 Feb 2016)

bbari1 said:


> Does the AIB guarantee that they will pass on the future cuts to the existing customer ?



I don't believe there is any explicit guarantee but that has been their practice over the last couple of years.


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## Sarenco (10 Feb 2016)

gnf_ireland said:


> "Just the lowest monthly mortgage repayments over the term of your new mortgage with a KBC current account"
> 
> What exactly does this mean?



I would read that to simply mean that the current account discount is not a short-term, "teaser" rate.  In the context in which it appears, I think it's pretty clear that KBC are simply trying to distinguish their offering from the BOI/PTSB offerings.


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## bbari1 (10 Feb 2016)

Sarenco said:


> I don't believe there is any explicit guarantee but that has been their practice over the last couple of years.



You are right, there isn't any guarantee with AIB either. I called AIB earlier and they said the same.

When borrowing €230K over 25 years, it will cost an additional €10K with AIB (3.55%) when compared with KBC (3.30%). The only way I will avoid the additional cost if AIB passes on the cuts to existing customer in future.

Are we hoping/expecting any cuts by AIB in the future ?


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## SS expert (10 Feb 2016)

@bbari1 Do you care if you switch in 1 year? Will you be able to switch in 1 year? Who do you switch too in 1 year?...
If you go with KBC you would want to be able to answer the above questions...

More than likely (Based on the past):
KBC won't give you the any new cuts, AIB will.


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## SS expert (10 Feb 2016)

bbari1 said:


> Are we hoping/expecting any cuts by AIB in the future ?



I think all the banks will have lower interest rates over the next year. That's the current trend... but it could swing the other way if there is a major downturn...


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## Sarenco (10 Feb 2016)

@bbari1 - making predictions is always difficult, especially about the future!

If it was me, I would go with the lowest rate available today - 0.25% is not an immaterial difference.


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## bbari1 (10 Feb 2016)

SS... if not much cost or inconvenience i wouldn't mind switching every year. 

Sarenco. Lowest available rate is by KBC but apparently it's a No No by everyone. 

Would you choose aib over kbc even they are 0.25% higher than aib?

Apologies for all the questions and I'm sincerely thankful to all of you.


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## SS expert (10 Feb 2016)

Switching is a pain in the ass... it takes 2-3 months!

If you go with KBC the only viable option is to switch to ulsterbank or maybe a new entrant

PTSB & BOI will lock you in for 5 years
AIB you will need to cover solicitor fees of ~1000 euro

after that you could go back to KBC but I think they will then lock you in for 3? years


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## qwerty5 (10 Feb 2016)

If you're borrowing more than €250K then Ulster Bank do 3.35% 
http://digital.ulsterbank.ie/personal/mortgages/mortgage-rates.html

This is cheaper than KBC. Cheapest they have is 3.4% if you're less than 50% LTV.


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## Sarenco (10 Feb 2016)

bbari1 said:


> Would you choose aib over kbc even they are 0.25% higher than aib?




Would I opt for AIB if the interest rate on offer today was 0.25% higher than the rate offered by KBC today?  No, in those circumstances I would go with KBC.

If the margin was lower (say, 0.1%), I might go with AIB.


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## Sarenco (10 Feb 2016)

qwerty5 said:


> This is cheaper than KBC. Cheapest they have is 3.4% if you're less than 50% LTV.


 
It's 3.2% with the KBC current account discount.


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## bbari1 (10 Feb 2016)

Sarenco said:


> Would I opt for AIB if the interest rate on offer today was 0.25% higher than the rate offered by KBC today?  No, in those circumstances I would go with KBC.
> 
> If the margin was lower (say, 0.1%), I might go with AIB.



You would go with KBC even they didn't / won't pass on future cuts to the existing customers ?


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## Sarenco (10 Feb 2016)

bbari1 said:


> You would go with KBC even they didn't / won't pass on future cuts to the existing customers ?



Yes, if they were charging 0.25% less than AIB.  It's a judgment call at the end of the day but 0.25% is not an immaterial difference and there is no guarantee that KBC or AIB will ever charge lower rates in the future, either to new or existing customers.


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## bbari1 (10 Feb 2016)

qwerty5 said:


> If you're _borrowing more than €250K then Ulster Bank do 3.35% _
> http://digital.ulsterbank.ie/personal/mortgages/mortgage-rates.html
> 
> _This is cheaper than KBC._ Cheapest they have is 3.4% if you're less than 50% LTV.



I am not borrowing €250K therefore I can't avail 3.35%. in this case the lowest I can get from UB Is 3.50%.


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## SS expert (10 Feb 2016)

Why not go with ulster bank? its only 0.2% difference.


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## Brendan Burgess (10 Feb 2016)

Ulster Bank has committed to making the rates for new customers available to existing customers. They also allow existing customers avail of lower LTV rates if their LTV falls into a new category. 

AIB has made no commitment but it has been their practice to pass on rate cuts equally to new and existing customers. They don't allow you avail of the lower LTV rate if your LTV falls. 

As they are the only two lenders to be treating their customers fairly,  I would not take out a loan with any of the other lenders who does not do this. 

It's all very well to say "Take out a loan with KBC and switch if they don't pass on rate cuts".   Most people don't get around to switching. And some will not be able to switch e.g. if they change job or if their income falls.  Look for a lender who treats you reasonably well, not a lender who waves sweeties in your face, and then screws you as soon as you are an existing customer. 


ptsb now has the same headline rates for new and existing customers, but they compete for new business by offering 2% cash back and a 0.5% discount in the first year. This allows them keep the headline rates high.


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## bbari1 (10 Feb 2016)

SS expert said:


> Why not go with ulster bank? its only 0.2% difference.



My LTV is 65% and the rate from UB will be 3.70% which is more than two of the banks (KBC and AIB ) under consideration.


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## PadKiss (11 Feb 2016)

_"Ireland has raised €1 billion in 10-year borrowings this morning at a rate of just under 1 per cent. The auction was launched into turbulent markets but bond prices were strong this morning, which helped push down the cost of raising the funds."_

Just to highlight the unfair rates being charged to SVR customers Padraic


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## 44brendan (11 Feb 2016)

My personal view is that its only a matter of time before a new entrant sees the advantages of coming into this market with a very competitive suite of rates and upsetting the current Cartel. All indications are that mortgage lending is one of the safest and most profitable lending options in the market. This of course is dependent on a diligent assessment process which the CB are now enforcing.
Current volatility in the banking sector is likely to mean that the bigger players are not going to make this move in the short/medium term but similar to the recent couple of new entrants there is likely to be a smaller player out there who can see the advantages of being a first mover in this area.
I have been present in some high level discussions (observer only) where it was touted to promote an offshoot mortgage provision based initially at low LTV/LTE bracket and moving forward from there.


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## Delboy (11 Feb 2016)

44brendan said:


> All indications are that mortgage lending is one of the safest and most profitable lending options in the market.


Thats some statement given the world record level of mortgage arrears in this country v's the # of repossessions actually taking place


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## PadKiss (11 Feb 2016)

Delighted to hear that Brendan it wont be before time but of course it makes sense as the current situation cant continue and deep down our lenders know this. If BOSI arrived tomorrow all lenders would drop interest rates like stones and still make good profits. I also think that lenders will eventually realise that by having high home-loan rates they are in effect killing their own market in the broader economy (car loans etc) as it is affecting the economic performance of a wide spread of areas. However I believe the short term drive for profit outweighs the longer term thinking that should occur and was hoped for in two of the main culprits becoming "pillar banks". Its wrong and being allowed which is the frustrating part, I cant understand how the gov cant see through the short term mist and see the clearer picture. Padraic


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## 44brendan (11 Feb 2016)

Delboy said:


> Thats some statement given the world record level of mortgage arrears in this country v's the # of repossessions actually taking place


Predominately related to poor lending practices and lax supervision of the CB.


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## WorstPigeon (11 Feb 2016)

Delboy said:


> Thats some statement given the world record level of mortgage arrears in this country v's the # of repossessions actually taking place



Arrears are presumably far less likely on a <=3.5x income <80% ltv mortgage taken out today than a ridiculous >5x income 100% ltv mortgage taken out in 2006, though. If you look back at the "Mortgages and buying and selling houses" forum here, people were getting crazy loans during the bubble; it's really no surprise that so many are in arrears.


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## Brendan Burgess (12 Feb 2016)

44brendan said:


> I have been present in some high level discussions (observer only) where it was touted to promote an offshoot mortgage provision based initially at low LTV/LTE bracket and moving forward from there.



This seems like a no-brainer to me.  As there is no deterrent for those who choose not to pay their mortgage, high LTV lending is risky. But there is virtually no risk in 60% LTV lending especially if combined with 3 times LTI ratios. And don't forget that while most new mortgages are  90% LTV and 3.5 LTI , after a few years they meet the 60% LTV and 3 times LTI.  So there is a market in the gap. 

Brendan


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## 44brendan (12 Feb 2016)

The main obstacle for an entrant at this level is the size of the Irish market. I.e. This is effectively a niche market with limited scope to expand given the relatively small population. The exercise I mentioned earlier did not progress as the level of potential profitability was considered too low for a stand alone operation. A bank is unlikely to enter this market on a stand alone product offering (savings products being an exception). Cross sell and scope for expansion is a big issue in this type of decision and what would appear quite profitable to a smaller company would be deemed small to an international bank.
My own opinion is that pension funds must now be looking outside of the stock market bond type limitations towards other long term investments that can give both a reasonable level of return plus a relatively low level of risk. The recent announcement of a new entrant to the Irish mortgage market backed by pension funds is a positive indicator and when they are up and running they will surely see the advantages of offering more reasonable rates and challenging the dominance of the existing banks. Volatility in the stock markets could help accelerate this process.
Securitization and sale of parcels of "junk loans" in the US gave this process a bad name due to the fact that there was no reasonable level of due diligence applied to the loans sold. However the process of Securitisation is a good one and a very effective funding tool to avoid liquidity being tied up in a long term product. Its' only a matter of time before we see trust returning to this market and sound mortgage lending been accepted as the low risk product that it once was!!


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## Gordon Gekko (12 Feb 2016)

One wonders how good an opportunity it really is. A mortgage book of €500m would be ambitious for a brand new entrant without the distribution network of the current players. BOI were trumpeting their 2% net interest margin on new loans which I understand is not sustainable in the context of mortgage lending. A net interest margin of 1.5% would create revenue of €7.5m per annum from which you have to run the business (e.g. pay staff, pay brokers, pay the Central Bank, have Compliance and Arrears Departments). Plus it's nigh on impossible to repossess a family home. There are easier ways to make money, and the above numbers (notwithstanding their incremental nature) would hardly excite the Santanders of this world.


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## Berneseduke (8 Mar 2016)

Update: Received a letter from AIB saying they will no longer be charging me Current account fees as my mortgage is drawn from it.


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## Degzs101 (19 Apr 2016)

Just got approved with AIB  at 3.55% on  LTV Variable >50%<=80% rate but for me the KBC rate is a lot better 3.30%. From what I am reading that KBC customer services is  unsatisfactory but over the 30 years the saving should out way the negatives. I am thinking the variable rates not going to change over the year or so it would sense to stay on the variable rate compared to the fixed as it a little better.


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