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?