AIB announces 0.25% cut in mortgage rate + €2,000 for switchers

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So charging someone who has never missed a payment on his mortgage and has an LTV of less than 50% 4.25% while a newbie can walk in off street and borrow 80% of the purchase price at 3.1% is fair?
On 500k the customer with the lower LTV and established payment track record ends up paying maybe 100k more on a 20 year mortgage
 
Never said it was fair. Life isn't fair.
You could have three neighbours, side by side in a Celtic Tiger estate....1 on a tracker at +0.75%, 1 on an SVR of 4% (after having gone fixed for the 1st ten years) and 1 who's not paid a cent for the last 4 years and now has FF/David Hall/the Courts Service/Davy Crockett etc etc fighting to get him a write off down to what he can afford.
All 3 mortgages with the same Bank
 

And the banker who oversaw the loan book grow so big that he was complicit in driving the bank in to the ground is probably now the CEO.
 
Silvio Dante said:
So charging someone who has never missed a payment on his mortgage and has an LTV of less than 50% 4.25% while a newbie can walk in off street and borrow 80% of the purchase price at 3.1% is fair?
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Whether the banks are right or wrong, the person who has a LTV of <50% and has never missed a mortgage payment should not be paying 4.25%. They have it within their power to switch providers and get a better rate. If more people done this, then the banks like KBC & BOI would be treating their existing customer better.

If every person who was able to switch from BOI and KBC done so tomorrow morning, so you believe those banks would continue their policies of only passing on rates cuts to new customers?

With regards to those who cannot switch, I do believe there should be legislation to cap the interest rate charged for those in negative equity and LTV>80%, as a short term measure. However, in say 5 years time, this would need to be removed and let switching deal with the situation - as the majority of people should be out of negative equity at this point (assuming they are still paying their mortgages)
 

I am going to play devils advocate here for a minute - so bear with me.

I am in a totally different situation. I bought in 2011 and the houses around me that have sold recently have gone 50% higher than what I paid for mine - with very high demand for them due to location. I had a LTV of >72% on purchase, and with an aggressive overpayment strategy for the last 5 years + increase in house prices, my LTV is now >30%. I pay 3.55% with KBC, after switching from BoI last year where I was on 4.35%. LTI is about 1.5 times.

I see myself as 'ultra low risk', and if I was to default, it would be in my interest to immediately sell and clear the mortgage down and use the equity to buy somewhere cheaper. Any attempt for me to drag out the progress would only see my equity in the house reduced - the banks would always get their money back.

So if 'ultra low risk' is 3.55%, what do you feel an appropriate interest rate for yourself, in your situation, is (being honest)? You have a LTV of 130% - I don't know anything else about your situation etc. Do you feel that a LTV of 130% warrants a premium on 'normal' lending of say 80% LTV? If so, what is that premium.

The harsh reality of the situation is all SVR holders are paying the price for where we are, no matter what our personal situation is. Some can switch and do, some could switch and don't and some cannot switch at all. However, we also have to be realistic on our personal mortgage risk profile.

I notice you claim you are being overcharged on your mortgage by 5k - if you bought at the height of the boom, I assume you had the option to go on a tracker but choose not to? You have also been 'overcharged' on your house by a lot more, but again that was a personal financial decision you made. I don't think it is as clean cut as you say, there were a series of financial decisions by you that resulting in your current situation - you have to take at least some responsibility for a number of them.


*Note* you can see from other posts I have made, I do believe those who are in negative equity and LTV >80% should be protected by legislation.
 
Its all very well airing our grievances here but I am contacting the people at the top so i wrote to Michael McGrath TD and he has written back to me indicating a bill is going to be put through the Dail giving the Central Bank powers to direct banks to lower their variable rates.

Wer in a better place than 12 months ago due to minority Government.
 
Paul Reilly said:
he has written back to me indicating a bill is going to be put through the Dail giving the Central Bank powers to direct banks to lower their variable rates.
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And it goes without saying that the Central Bank have said they don't want this power, and there are numbers of people on this site who also disagree with it.

The minority government has meant that there is a better chance of this bill passing (it was presented last year as well) as was one from Sinn Fein - but does not mean it will change anything.
 
It all adds to the pressure in my view. Rates have stayed too high because ultimately there hasn't been the political will to force them down. Recapitalisation has seemed to be the priority. I'm sure the bill isn't perfect but it's this sort of action that will make the difference I think.
 
@gnf

Of Course 10 Years ago when I bought my house I knew little about mortgages
But now I know more

I didnt know what a tracker even was.

Its all very well in hindsight saying I am responsible for these errors of judgement so in essence buying a house is a gamble.

This thread is about mortgage fairness not gambling on the best deal and being penalised 5k if your wrong.

At least your always right.

It must be great in your world
 
SS expert said:
Introduction of a €2,000 -
I assume there will be a lock in period for this? I can't find out anything on it from the AIB website
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I rang AIB this morning and the person I spoke to didn't know of any lock in period. Doesn't mean there isn't/won't be!
Has anyone else heard something concrete?
Do the "professional fees" cover all costs associated with switching?
 
@Paul Reilly

Mortgages in Ireland are a gamble, as no one can predict the future. It is not possible to compare any rate into the future unless you compare trackers with the same underlying index.

Every person who chooses to fix their mortgages are 'gambling' on the interest rates going up; those who choose not to fix are 'gambling' on the rates continuing to fall. Everyone applying for a mortgage today are 'gambling' on the bank they choose will treat them fairly and not 'abuse' them if things go bad in a few years time. Ask any P-TSB SVR mortgage holder who were paying massive rates a few years ago, simply because the bank could do it. I am sure a large number of their customers regretted their decision to choose P-TSB at the time.

And lets be blunt about it - in most cases it is a long term (20-30 year) gamble as very few switch over the lifetime of the mortgage.

Yes, completely agree this tread/forum is about mortgage fairness, but this means different things to different people. Some on here believe that those who are 'higher risk' should be paying a higher interest rate for their mortgage than lower risk customers. Others believe this is not fair on those 'trapped'. Some believe legislation is needed to reduce the interest rates; others believe its competition. We all have different opinions on it, some of which are reflected by our personal circumstances.

However, most agree that SVR mortgage rates are too high in Ireland, and most agree that there is an elephant in the room around repossessions that is a political nightmare. We cannot expect european rates, without european rules on repossessions. Its like saying we want Scandanavian childcare/healthcare arrangements but dont want to pay the associated taxes to fund it.

As I said at the bottom of my last post, I believe legislation is needed to protect people who cannot switch - like yourself. However I do believe this should be short lived, as those in high negative equity should be coming out of it over the next 5 years or so [Those who bought in 2007/08 will be roughly half way through their mortgage term by then].

However, you have not answered the question I asked - what rate do you think is a fair rate for you to pay on your mortgage? Since we are talking about mortgage fairness... What do you consider to be a fair mortgage rate for you given your personal circumstances?

As for your last 2 lines, I will ignore these for obvious reasons.
 
@Leaky1 Professional fees are usually paid as a flat lump sum and not based on receipts or anything else. So if you get it done for 1500, you pocket the 500 !
 
@gnf_ireland Thanks for that. I switched to EBS in 2007 and, as you say, I pocketed about €100 as the legal fees were just under the switching incentive they had at the time.

Switching from EBS 3.7% SVR to AIB LTV 3.3% would reduce my payments by about €240 annually. Not a huge amount so I'd be hoping to not have any financial outlay in this - annoying paperwork I can handle!
 
Any idea whether the AIB cuts in interest rate will be passed onto Haven and Ebs in coming months or is it confirmed as Aib only
 
@gnf_ireland

Apologies for those last 2 lines

You make sensible points

I think a "fair" rate is one that is closer to the norm in the Economic Community we are part of. If thats not possible something around AIB rate of around 3.5% would be "fair".

That way the banks still make money while reducing variables to what they should be.

Remember when the base rate went up by .25% the variable also rose by .25%. However when the base rate dropped the Variable Rate remained high.

Now due to inaction on this area and rental accomodation massive problems lie ahead for our country.

In essence if AIB drop their VR by 1% say in the next year I can only see TSB dropping theirs by 0.5% at most.

Not only did I gamble on the wrong mortgage type - at the time I bought the tracker seemed a risky thing that could vary widely but CRASH and its gone 1 year after I bought- but I also gambled with the worst bank TSB. Although in 5 or 6 years I can switch like you say...if I still have a house.

I dont think much will change in the housing market as for the past 10 years Ive paid between 634 and 787 a month which currently leaves 5 quid on tableat end of month on current 745.

Post 2017 due to tapering this increases to 895 so then its move into parents house time unless miracle jobs appear in west that arent CE schemes that FG think are jobs . Ive overpaid a couple of months so might see out 2018. But mark my words post 2017 with loss of tax relief on a tappered basis thousands will have to give up their homes....outside of Dublin Cork Galway
 
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