Graph of historical 5-year fixed rates. (Help needed.)

[Paul F]

I have trawled through the archives to find the rate changes of the main lenders (on their 5-year fixed rate) over recent years. Here is the graph that I made.

Notes:

• I have deliberately excluded 5-year fixed rates that were only available to new customers, and "high value" and green rates
• The above graph is for the LTV≤80% rate
• Permanent TSB only started offering fixed rates to existing customers in mid-2017

Requests and questions:

• Do you see any obvious mistakes in any of the lines?
• Does anybody have the dates and interest rates for BOI rate changes from before 2015?
  • I am only interested in the 5-year fixed rate that was available to both new and existing customers (not any "new customers only" rates)
• Does anybody have the historical variable rates of each of the three main lenders?
  • What is the fairest rate to use for comparing lenders, both for the present time and for previous periods?
• Does anybody have data on the increasing popularity of fixed rates (versus variable rates) over the last 15 years or so?
• Before mid-2017, what options were available to existing PTSB customers when their fixed rate expired?

Observations:

• There does not seem to be much of a correlation between retail mortgage rates and either the ECB base rate or the 5-year swap rate
  • What is driving mortgage pricing in Ireland?
• If we look at the last 8 years, Bank of Ireland's 5-year fixed rate was only 0.06% higher than AIB's on average
• But if we only look at the last 5 years, Bank of Ireland's 5-year fixed rate was 0.25% higher than AIB's on average
• Over the last five and a half years, Permanent TSB's 5-year fixed rate was 0.58% higher than AIB's on average

@Brendan Burgess @RedOnion @NoRegretsCoyote

 

[Brendan Burgess]

What is the fairest rate to use for comparing lenders, both for the present time and for previous periods?

Hi Paul

I think that this is the key question. It depends on the purpose of the comparison.

You will get some of the old information about ptsb and AIB in this thread

Key Post - History of PTSB Variable Rate

Hi All, I've put together a list of my variable rate and it's changes since I have being with PTSB on variable. I fixed for three years in 2006 at 4.65% so I am missing three years - so if anyone can update this with their rates at those times that would be great. I cannot find any documents...

www.askaboutmoney.com

Key Post - PTSB standard variable rate - Fact File

Updated 16.30 pm 8 December to reflect PTSB's decision to pass on a rate cut of 0.71% and AIB's decision not to pass on the rate cut. The ECB has reduced interest rates by 3% since June 2007, but PTSB has passed on cuts of only 0.25% on its variable rate mortgages. PTSB, a state owned bank, is...

www.askaboutmoney.com

Brendan

Moderator's edit: also in this thread:

History of AIB Standard Variable Mortgage Rate

Hi, Could anybody help me in establishing where I can find out the history of AIB's standard variable mortgage rate between 2009 and 2013? thanks.

www.askaboutmoney.com

 

[Brendan Burgess]

If someone lost their tracker , their pack calculating the refund would show the rate they were on. If they were on a SVR you would get the history there.

But I am struggling to see how I would use the information if I had it.

 

[Brendan Burgess]

Here is the AIB SVR

History of AIB SVR

Announcement	SVR
10 March 2003	3.68%
29 January 2004	3.3%
12 February 2007	4.6%
16 June 2008	5.25%
10 October 2008	5.5%
26 April 2010	2.75%
1/4/2013	4%
186/2013	4.4%
April 2014	4.4%
1/5/2015	3.9%
18 March 2016	3.67%
15 March 2018	3.15%

 

[NoRegretsCoyote]

• Does anybody have the dates and interest rates for BOI rate changes from before 2015?

I only keep records since 2016 for BoI. Archive.org might help you get something going back longer.

• Does anybody have data on the increasing popularity of fixed rates (versus variable rates) over the last 15 years or so?

From memory BoI were the first to start pricing fixed rates lower than variable around 2014 and the other lenders followed. But my memory on this is hazy enough.

What is driving mortgage pricing in Ireland?

Whatever the lenders can achieve to stay profitable is the glib answer. Fundamentally the cost of retail deposits seems to be a big driver of mortgage rates. Irish banks haven't increased rates much yet as they are swimming in deposits and don't have to pay much interest to attract them.

 

[Paul F]

I only keep records since 2016 for BoI. Archive.org might help you get something going back longer.

Thanks. I had a look but I couldn't find rates from before 2015.

What is driving mortgage pricing in Ireland?

Whatever the lenders can achieve to stay profitable is the glib answer. Fundamentally the cost of retail deposits seems to be a big driver of mortgage rates. Irish banks haven't increased rates much yet as they are swimming in deposits and don't have to pay much interest to attract them.

Do you know if AIB are swimming in deposits to such an extent that their recent mortgage rate increases translate into pure extra profit? Or are they partially dependent on the markets to fund their lending?

 

[Paul F]

Here is the AIB SVR

Thanks Brendan. Is this a complete list of the rate changes or could there be some missing data points?

Was the SVR the same regardless of LTV? Was AIB also offering LTV variable rates at any point during this period?

 

[skrooge]

Do you know if AIB are swimming in deposits to such an extent that their recent mortgage rate increases translate into pure extra profit? Or are they partially dependent on the markets to fund their lending?

To give you an idea. AIBs balance sheet grew by about €17 billion between 2020 and 2021. €11 billion was from customers and a further €6 billion from other interbank deposits. That had to put the money somewhere. The corresponding increase in assets were in "cash and balances with central bank".

In other words they were swimming in deposits and couldnt lend it out faster than it came in. All they could do was deposit it with central banks at a time when the cb was charging negative rates of interest.

 

[Brendan Burgess]

Hi Paul

I dont' remember all the detail. Bank of Ireland and permanent tsb had SVRs of 4.5% for a lot of the time. PTSB had put it up to over 6% to try to avoid nationalisation.

AIB's was always much lower than both. I think my dataset is complete. They didn't change that much.

After our campaign against ptsb , they brought in a Managed Variable Rate. It was still very high, but anyone on an SVR could move to it.

Brendan

 

[NoRegretsCoyote]

Or are they partially dependent on the markets to fund their lending?

I don't know a huge amount about liquidity and capital policy at large banks. I do know that banks generally keep a minimum share of long-term, market-based funding even if they are closing the doors on retail depositors due to excess funds.

I haven't checked in a while but Irish households have reduced their debt-to-income ratio by about a half since 2010. 2020 saw a big Covid-related jump in bank deposits that hasn't unwound and has in fact increased. Banks are swimming in funds and would be lending much more aggressively if it wasn't for much lower risk appetite and supervisory restrictions compared to 15 years ago.

 

[Paul F]

@NoRegretsCoyote Does all that suggest to you that the banks' recent rate increases translate into almost pure extra profit?

 

[NoRegretsCoyote]

@Paul F I really don't know enough about their cost base and something can be more or less profitable at the margin than on average.

The latest S&P report on the main three banks is here is here and seems generally pretty positive about profitability.

 

[unknowninsider]

Hi Paul, swap rates are the key variable missing from your chart. Swap rates are the reason we pay break fees, they are a critical component in the cost of funding a fixed-rate mortgage.

 

[Paul F]

Hi Paul, swap rates are the key variable missing from your chart. Swap rates are the reason we pay break fees, they are a critical component in the cost of funding a fixed-rate mortgage.

Hi @unknowninsider The graph shows the 5-year swap rate. Are there other swap rates that you think are more important that I should add?

 

[unknowninsider]

Apologies, I did not see it. It's a critical variable. It dropped 200bps over the reference period in your chart (peak to trough) and goes a long way to explain why mortgage rates have moved they way they have over the past decade. There is strong linkage between base rates and swaps. You could consider presenting them as a single variable (ECB Rate + Swaps).