Can PTSB just keep raising rates?

S

shoppergal

Registered User
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172
Hi,

Have a variable rate mortgage with PTSB. Obviously they raised the rate by 1% recently and now today they've raised their fixed rates.

So my question is is there any regulation that can stop them keeping raising rates. If they wanted to could they increase again by another 1% later this year(i mean separate from any ECB increases) and another 1% next year and so on.

We wouldn't get a mortgage with anyone else as we're in negative equity so just trying to figure out what our options will be if rates keep rising. We're fine for another 2% but after that wouldn't be able to keep up with any other increase.
 
shoppergal said:
Hi,

Have a variable rate mortgage with PTSB. Obviously they raised the rate by 1% recently and now today they've raised their fixed rates.

So my question is is there any regulation that can stop them keeping raising rates. If they wanted to could they increase again by another 1% later this year(i mean separate from any ECB increases) and another 1% next year and so on.

We wouldn't get a mortgage with anyone else as we're in negative equity so just trying to figure out what our options will be if rates keep rising. We're fine for another 2% but after that wouldn't be able to keep up with any other increase.
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I teased this out in the context of the Irish Nationwide some years ago. They had rates for new customers which went up and down in line with the market. But once you were an existing customer, they only passed on half the rate cuts to you.

The contract allowed them to vary the rate.

The advice I was given was that this meant that they were entitled to vary the rate within reason. They couldn't suddenly up it from 10% to 50%. But it would seem that PTSB is well within reason to charge 5% as this is just about enough for a sustainable business for them.

Brendan
 
PaddyBloggit said:
I see they are raising their fixed rates too ... massive hikes:

2 year rate is now 7.25%
5 year rate is now 8.75%
7 year rate is now 9.1%
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Oh my goodness, we're back to the 90's. But then again Irish Life went to about 17% at one stage at that time.
 
They are searching for the point of which they can raise rates but not cause too much default. Delicate balance, but I'm sure they have done their sums from their loan book. Of course, I may be giving them waaaay too much credit here (no pun intended) and they may just be doing the Oirish thing. *Sales are down so just raise the prices, that'll sort it out.

*Taken from the LVA manual of a beginners guide to being a hard pressed publican
 
Shawady said:
Only last week I said it will not be unusual to see people paying 7-8% for their mortgage.
TSB are obviously factoring where they think their variable rate is going to go in the next few years.

http://www.askaboutmoney.com/showthread.php?t=150601
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The difference between now and the 1980's is that inflation in the 80's varied between 20% 1980 and 4.6% in 1989 so real interest rates were far lower than headline rates. I can't see significant positive inflation here for a long time to come - certainly in wage rates - so real interest rates will be punitive.
 
If they keep raising rates like this, people will default. Surely they are aware of this?
 
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