I think that PTSB SVR is about right

DerKaiser

Frequent Poster
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1,442
I'll be controversial here.

Given that PTSB
1) have an outrageously low deposits to loans ratio
2) need to offer interest rates of 4%+ to attract depositors
3) are likely to face arrears in up to 15% of its existing book of mortgages

are they the only ones with any sense in terms of setting a mortgage rate in or around the 5% mark for customers it built up largely from 2002-2008?

Given the increased strictness of underwriting standards for new business nowadays, I'd expect the interest rate on the existing book of business for any bank to be 1% to 2% higher than the rates being offered to the safer new customers.

Think of it. If someone offered to sell you the collateralised repayments of the 2002-2008 book versus the 2009-2012 book do you not think you'd apply a significantly higher haircut to the 2002-2008 business?

Also, if a PTSB mortgage holder really considers themselves to be zero risk, as measured by savings, good LTV and a solid income, shouldn't they be in a position to remortgage at rates closer to 3% in the short to medium term?

Finally, we talk about competition, complain about cartels and price fixing, and then expect all banks to operate their loan rates withing a narrow range?

I think the new CEO is mad to be going on his current crusade of apologising for SVR rates.
 

kaza

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Messages
175
Also, if a PTSB mortgage holder really considers themselves to be zero risk, as measured by savings, good LTV and a solid income, shouldn't they be in a position to remortgage at rates closer to 3% in the short to medium term?

I have not heard of any customers on this website refer to themselves as being zero risk. Plus while alot of us might have good savings, good repayment history, solid jobs etc.. our LTV rate is not below 80% because of the massive decrease in housing prices. They are not asking for lower SVR rates because they are "zero" risk - they are asking for lower rates because PTSB has a SVR that is "that is significantly out of line with the rest of the market" (as quoted from PTSB CEO).


Finally, we talk about competition, complain about cartels and price fixing, and then expect all banks to operate their loan rates withing a narrow range?

The problem here is that we are not operating in a "normal" competitive market where people can move lenders because of their LTV rate. People are at the mercy of their bank and what ever rates they wish to charge and can do nothing about it.

Given the increased strictness of underwriting standards for new business nowadays, I'd expect the interest rate on the existing book of business for any bank to be 1% to 2% higher than the rates being offered to the safer new customers.
Think of it. If someone offered to sell you the collateralised repayments of the 2002-2008 book versus the 2009-2012 book do you not think you'd apply a significantly higher haircut to the 2002-2008 business?


But what if you still are a "safe customer" as you state these new customers are? What if you meet all the same "strictness" tests as new customers but that the only thing that is different between you and a new customer is your LTV rate? Simply because you bought at different times? PTSB can make money from the new customer at 3.7%, so why can they not make money from a "safe existing" customer at 3.7%? Or is it simply the fact that existing SVR customers are an easy target and way to make money to compensate other loss making areas of the bank?
 

DerKaiser

Frequent Poster
Messages
1,442
They are not asking for lower SVR rates because they are "zero" risk - they are asking for lower rates because PTSB has a SVR that is "that is significantly out of line with the rest of the market" (as quoted from PTSB CEO)
Maybe the rest of the market (effectively AIB & BOI) are the ones who are out of line? I would have loved to have had shares in a bank that was out of line with the market in 2007 i.e. one that did not fund multi-million development loans for green fields in Leitrim or one that offered ECB +2% as its absolute best tracker rate.

But what if you still are a "safe customer" as you state these new customers are? What if you meet all the same "strictness" tests as new customers but that the only thing that is different between you and a new customer is your LTV rate?
I would strongly argue that if two people are in the same position in terms of their income, savings and their assets (e.g. have similar houses), I'd absolutely view the one with the higher debts (higher LTV) as higher risk and as such should be charged a higher rate.
 

itsallwrong

Frequent Poster
Messages
327
..have an outrageously low deposits to loans ratio - their doing - they chucked the rule book out years ago. why should SVR's pay?

..are likely to face arrears in up to 15% of its existing book of mortgages - a lot of which is compounded by their high rates.

The new CEO has little choice but to apologise for his company having little regard for it's customers and wringing as much as they can out of them.

Risk has nothing to do with the rates being charged - every single last one of their SVR customers is being squeezed, regardless of their risk, LTV, income, savings or anything for that matter.

remortgage at better rates - you do read the numbers of people unemployed, in arrears, lower income and so on?..
honestly - how many mortgage customers are healthy enough these days to come even close to filling in the forms, never mind find a bank that will do it?
PTSB SVR is 1 in 8 arrears. Never mind the lucky people who meet the payment but live on air to do it.
Leaving no disposable income and in the banks eyes, non runners.
 
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