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 charging its customers 5.19% which is 2.19% more than AIB, another state owned bank, is charging its customers.



The ECB rate has fallen by 3%
AIB and the local authorities have passed on 2.2%
But PTSB has passed on only 0.25%

But new customers borrowing less than 80% of the value of the house pay only 3.7%

In January 2012, PTSB reduced the rate for new business only to 3.7%.

Existing customers cannot avail of this rate even if they have an LTV of less than 80%.

If PTSB can lend profitably at 3.7%, they must be making huge profits from the borrowers paying 5.2%

Full details

What is the difference in cost between an AIB loan and a PTSB loan

On a €300,000 loan over 30 years, Karen will pay €144,397 more than John. This is almost twice as much.



Why is Karen paying twice the interest that John is paying?
Ask Minister Noonan - I don't know

Why does Karen not just switch to AIB?
In a normally functioning market, PTSB could not get away with this, as Karen would switch.

Because she is probably in heavy negative equity and most of the banks are no longer taking switches anyway.

But doesn't PTSB have to compensate for the losses they are making on trackers?
This makes no sense. The PTSB has extensive borrowings from the ECB/Central Bank at 1.25%, so they are even making money on their trackers.

Even if they were making losses on their trackers, there is no reason for the SVR customers to subsidise these rates through predatory rates.

But the same arguments can be made anyway about AIB and EBS. Their SVR customers are not subsidising their trackers.

"But I am on a fixed rate, I don't need to worry"
But what happens when your fixed rate ends? You will go onto the LTV rate which is 6%, so you do need to worry.

How many borrowers are affected?
There are no official figures, but here are my best estimates

In total, there are around 700,000 customers with home loans worth €115 billion ( Central Bank arrears stats)

PTSB has a home loan book of €19 billion, so they have around 115,000 customers. (Central Bank PCAR )

60% are on trackers. (a figure widely used, not sure of its source)
I would guess that 20% are on fixed rates
which leaves around 20% on SVR and LTV

which gives around 20,000 home owners on SVRs now

with a total of 40,000 exposed to them over time.

What should Minister Noonan do?
The Minister used his powers of persuasion very effectively to encourage AIB to reduce their rate to 3%. He should use the same powers to reduce the PTSB rate to 3% above the ECB rate. At 3% above the ECB rate, each mortgage would still be very profitable for PTSB. PTSB variable rate customers are not asking for the state to subsidise their mortgages.

What is the effect of the higher PTSB rates on arrears?
There are no statistics available for the differences in arrears between AIB and PTSB, but one could assume that someone with the same loan who has to come up with an extra €6,000 a year is more likely to be in arrears.

LTV Variable rate - My Story....add yours

Below is an outline of our situation, how we came to be on this punitive 'LTV Variable Rate' as PTSB are calling it.

We purchased our home in Summer 2006 for which we applied (through a broker) for a mortgage. We received a number offers from various lenders of the €275,000 we applied for and we chose with PTSB for a number of reasons. Their rates seemed fair and their advertising campaign at the time meant they were the bank we were most familiar with.

As this was our first home and we were young we wanted to know for a fixed period of time what our mortgage outgoings would be so we fixed on a rate of 4.99% for 5 years from July 2007. We were offered a 3 month moratorium at the beginning of the mortgage term which we also availed of to help us with fixtures/fittings/furniture costs etc. Our monthly repayment during these 5 years was €1144.00

Fast forward to July 2011 and just before our fixed rate ended we received a letter dated 06 July 2011 outlining our 'options'. We were shocked to say the least!
We had 3 choices.
1) LTV Variable Rate - 5.9% on the date the letter was issued,
2) 2 Year Fixed Rate - 7.25% on the date the letter was issued,
3) 5 Year Fixed Rate - 8.75% on the date the letter was issued.

Surely this was a mistake. All those years we were on a fixed rate of 4.99% and our friends had variable rate mortgages which were a much lower rate, we had looked forward to our mortgage repayments becoming more affordable and tracked the actions of ECB. I saw mention in the media of SVRs in AIB, BoI, EBS and others of 3 and 4%.

We phoned the bank immediately and arranged a face to face meeting with our branch in Limerick. I searched the PTSB website looking for evidence of what their 'Standard' variable rate at the time was. I could not obtain clarity on this and when we had our meeting with PTSB we were told there was no such thing any longer as a 'standard' variable rate and because our LTV ratio was deemed by PTSB to be beyond a certain threshold they offered us their 5.9% rate. Our new repayment would be €1388.00. Effectively, penalising us for being in negative equity, surely not?
In September 2011 we received a letter notifying us of the ECB .25% rate increase which increased our interest rate to 6.15% and further increased our repayments. We wondered aloud how high would this rate be allowed to go until 'someone' stepped in.
To date, we have not yet received communication on PTSB notifying us of the recent .25% ECB decrease, which would bring our interest rate back down to 5.9%.

I am furious that a state-owned banking institution is being allowed to continue to act in this manner. How is it possible for AIB to operate a rate of 3% interest on their variable rate mortgage holders while PTSB operate at 6.15% in the same market conditions? It is daylight robbery, like they are willing us to go into arrears on our mortgage. I only wish I had the freedom of choice as a consumer to move lender. Never again will I do business with PTSB.

Hi I am a PTSB customer on the LTV variable rate of currently 6.15% (this is to be reduced to 5.9% in my Jan 2012 mortgage repayment in line with November’s 0.25% ECB reduction).

I am outraged that PTSB which is a state owned institution are being let away with charging their variable rate customers such punitive rates of 5.9% while AIB (another state owned institution) are charging their variable rate customers half that rate at 3%.

What this means for me is a difference of €520 per month in interest charged in comparison to an AIB customer on the same mortgage amount/term. This means I am paying €125 more per week than the equivalent AIB customer. But yet we are both customers of the same institution (the State). How can this be fair?

I am normally of the opinion that banks should set their own rates and the government should not get involved. However, these are not normal times and we are not in a normal market. In a normal market the bank would not be owned by the State! In a normal market I could move by business elsewhere if I am not happy with my banks rates! But I cannot move, I am effectively tied to PTSB and their punitive rates – there is nothing I can do about the fact that PTSB have unilaterally raised their rates over the last two years, except to continue to pay them.

For me €6,000 a year in additional interest payments is crippling as I have a young family with all the normal family expenses of child care, etc.. How can the government stand back and allow myself and all the rest of the PTSB variable rate customers be penalized to this extent, for simply choosing one bank over another?

There was a media (government led) force over AIB's tardiness in passing on the .25% cut....Why??? They had not passed on the previous increases, why should they pass on the rate decreases this time? My point is that AIB now have a SVR of 3%, PTSB have 5.9% for the same product and both are government owned. Why was the pressure on AIB to reduce rather than on PTSB to reduce further? The rates need to be aligned.

I have emailed my local TDs about this matter (Brian Hayes, Pat Rabbitt, Eamonn Maloney and Sean Crowe). The only real response I have gotten so far is from Brian Hayes who has said he will bring this matter to the attention of Minister for Finance Michael Noonan. I really hope for my sake and all the rest of PTSB’s vulnerable variable rate customers that they treat this issue with the urgency it deserves. I will post an update once I hear more from Brian Hayes.

Hi,

I am PTSB customer on a variable rate, my current mortgage is an equity release mortgage on our famliy home and the current rate I am on is 5.44% this rate includes the last ECB rate reduction. I have been with PTSB for 18 years, had a small mortgage remaining until 5 years. We remortgaged, credit was cheap, plenty of equity in our property - what a mistake! Both my husband's wages and mine have been cut 55% over the last couple of years. Since 2009 PTSB have been rising the interest rate this together with reduced wages leaves things tight every month for us as a family of 4 . I am currently paying E680 interest more per month because I am with PTSB compared to AIB. If PTSB's interest rate was brought in line with AIB's rate more people would be able to pay down in full thier mortgage every month rather than restructure their mortgage. It is incomprehensible how the Government have sat back and let this happen considering it is now a state owned bank. Like many others we are caught in a trap we cannot move lenders and are paying for this every month that this is allowed to continue. I ask the Minister for Finance to address this issue urgently on behalf of the thousands of PTSB customers unfortunate enough to be stuck with them on variable rates.

We are first time buyers who bought in Jun 2006. We chose PTSB due to advice from our broker who said they had the lowest rates at the time. We had a number of offers from different banks at the time. The broker advised us to go fixed as the ECB rate was due to go up. We fixed on a 1 year new business rate of 3.45%. When that lapsed we asked the broker again for advice. She said that fixed again was the best option and so we took a fixed rate of 5.1%.

In Dec 2008 PTSB had a variable rate of 4.65%. We enquired what the breakage penalty was and to our surprise PTSB stated there was none. So in Jan 2009 we broke from our fixed rate and took the variable. Since then PTSB have hiked up their rate to a punishing 6.15%.

This is difficult for us as we now have 2 young children and Dublin childcare rates remain very high.We had to restructure our mortgage as a result even after saving and paying off large lump sums to try and reduce the term.We understand we freely bought into the market but are struggling through this extortionate variable rate from the state owned bank Permanent-TSB. This is despite the media and others focusing on the rates of BOI and AIB which are half that of PTSB.

In addition PTSB quoted a lower defunct SVR rate when they reported the rate hikes in 2010. They also stated that these were older customers who had little left on the mortgage. This was obviously done for cynical PR reasons and certainly fooled the media and politicians who are quoting this rate as recently as today.

Any customers who bought in the boom are on this extortionate >80% LTV rate of 6.15% and we feel forgotten about. In normal circumstances we would be able to switch. But this option is now removed so this state owned bank has us trapped.

Can I just add that PTSB's publicity stunt of reducing their variable rates by 0.71% today does not go nearly far enough - that will bring our Feb 2012 repayments down to 5.19% - the fact still remains that this will still be 2.5 % above AIB - assuming AIB passes on the 0.25% decrease.


Update: I rang PTSB & was told that rates will only be going down by .25% and they did not know where I heard it could be up to .71% for some customers!!!

We bought our home in 2004 and through a broker we got a PTSB 30 year mortgage. Fast forward to end of 2011 and it was the worst mistake ever. In the 7 years we have been variable for the first 2, fixed for 5 and now just starting a LTV of 5.8%?

We have 2 very small children, my husbands hours have been reduced and reduced and I am part-time compared to 7 years ago when we bot had very good wages. We were very cautious when taking out the mortgage compared to what we were offered at the time and purposely bought a house well within our budget so that we would not be crippled by mortgage payments if rates went up a bit. Now we are faced with a letter from PTSB offering us a variable rate of 6.05% which is totally unacceptable. Others in the Market (also state owned) are offering much lower rates but because of our situation now we are stuck with it.

I find it hard to believe that PTSB rates are so out of touch with other banks like AIB which is owned by the same people (me and you). Others are almost half? Is that a fair society? All the variable PTSB mortgage holders are not looking for anything the other state owned banks aren't already getting? I can't understand how a Government can as good as force banks into allowing cuts on interest rates and on the other hand ignore one bank charging their customers almost double?

AIB, BOI mortgages holders may read these stories and think 'Thank God we're not with PTSB' and your right but if one bank can do it so can another - could you cope with an additional 3% on top of your existing rate?

Why did Ptsb bring their rates down by 7 points yesterday, is it possible they are coming under pressure from outside influences already?

My wife and I bought a house in 2004 with a 30 Year 92% Mortgage with Permanent TSB.

November 2004 - 1 year fixed at 2.75%
November 2005 - 2 Year fixed at 3.39%
November 2007 - 4 year fixed at 5.5% - We were offered a tracker but unfortunately didn't take it.
November 2011 - PTSB have given us only 3 options, previously we were given between 5 and 7...

LTV Variable Rate - 6.05%
2 Year fixed Rate - 7.25%
5 year fixed Rate - 8.75%


These are outragous figures and it is disgusting what PTSB are doing to its customers, they basically have us over a barrel! The 2 year fixed rate would cost us €250 extra per month, while the 5 year would be €450!!!

The government needs to step in here and put a stop to this and force PTSB to align its rates with other providers such as AIB, after all, BOTH of these institutions are government owned!

Brendan Burgess said:

How many borrowers are affected?
There are no official figures, but here are my best estimates

In total, there are around 700,000 customers with home loans worth €115 billion ( Central Bank arrears stats)

PTSB has a home loan book of €19 billion, so they have around 115,000 customers. (Central Bank PCAR )

60% are on trackers. (a figure widely used, not sure of its source)
I would guess that 20% are on fixed rates
which leaves around 20% on SVR and LTV

which gives around 20,000 home owners on SVRs now

with a total of 40,000 exposed to them over time.

Click to expand...

These are official figures from PTSB:

Approximately 37% of the value of its residential mortgage book is on variable rates (not trackers). In pure numbers, this equates to approximately 80,000 mortgages, they say. That's LTVs and SVRs.

So, the tracker figure must be a bit less than 60%, even though this is indeed the figure that is widely quoted. Fixed rates would be less than 20% also, because they don't do proper fixed rates any more and people are rolling off their old sane fixed rates all the time.........

I bought my first home in 2005, I was attracted to PTSB because they were easy to deal with (at the time that should have started alarm bells ringing). They also offered deals like 3 months mortgage free at the commencement of the mortgage. My sister a solicitor who did a large volume of conveyancing for first time buyers states that the majority of her clients got their mortgages through PTSB at that time. Their rates were competitive especially for the first year and in any case you could change to a new provider very easily if things went the other way after the year. My troubles started when I got a new mortgage at the end of 2006 to repay the 2005 mortgage (which was a tracker with a good margin) and use the balance to buy an investment property. ECB had started to push their rates up and I was advised by an advisor in PTSB that because I was young and needed to know for budgeting purposes what my outgoings would be and because rates had gone so high in the 1980s it would be a good idea to fix for a medium term. Unfortunately I broke out of the fixed rate early and reverted to a variable rate in December 2008, it has been three years of turmoil since with rising interest rates. I have no trust in PTSB anymore, I closed my current account with them and withdrew my savings. I would never put any business their way again even if it was a mortgage at 0%. As an aside when I was arranging the two mortgages in 2006 they said they felt I would be a bit stretched if the rent was slow but they were approving them anyway because I must know what I was doing, responsible banking!!! I honestly believe that their staff got/get no training. I was offered an AIB tracker in 2006, why didn't I take that and run? Even on a variable rate AIB are now almost half the price of PTSB, it's hard to believe they have the same owners.....us!

more PTSB heartache

I took out my mortgage with PTSB in 08/2006,a family friend was my broker and got my 2 siblings SVR mortgages with PTSB,Thanks
I owe 360k and have 29 years left. Im now paying 2080 euro for a 3 bed semi house,madness.If i had a mortgage with AIB i would be paying around 1400 euro per month.
Im a tradesman and money is gone a lot tighter just as PTSB decide to pass on all there money problems for the likes of me to sort out for them.
As times got harder and harder i was left with no other choice but to look for interest only (something that i dont agree with)
Why should i be forced to stop paying the capital off my mortgage because of a bank not able to run there business properly.
My interest only payment is down to 1660 euro.Im sick
Absolutey nothing i can do about it at the moment.
But as soon as things change i shall jump ship to a reasonable bank if any?Im sure and hope most other SVR people should too.What will PTSB do then,when all there easy money has gone.They are shooting themselves in the foot.
This government isnt doing much either,i voted them in because Noonan was saying he was going to get the banks to drop there SVR rate after 100 days in charge of the country,surprise,surprise and no joy.
I even missed out on the mortgage interest relief at the budget last week because i bought my first house in 2004.
A friend of mind has a Tracker mortgage with EBS for the 360k and with with the ECB interest drop and mortgage interest relief is down to just over 1200 euro per month.Life isnt very fair.
Noonan needs to forget about people on trackers as they are on the deal of the century,he should be trying to help the SVR people who are taking all the pain.
Anyway rant over,now wheres the bottle of wine to ease my suffering,even thats going to be taxed to the roof soon.By then way 112.00 euro to fill my van with diesel.Is there a light at the end of the tunnel,i dont thing so.

I have updated the opening post to include the data from the other state owned lender - the local authorities

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 charging its customers 5.19% which is 2.19% more than AIB, another state owned bank, is charging its customers.


The ECB rate has fallen by 3%
AIB and the local authorities have passed on 2.2%
But PTSB has passed on only 0.25%

A local authority borrower is paying almost 2.45% less than a PTSB borrower.

Latest development after ECB rate cut July 2012 to record low

According to David Murphy Business editor on tonight's 9 o'clock news on Rte 1. When talking about PTSB SVR. I Quote "I understand that the bank is going to move to cut rates in the next few days possibly by more than 0.25%" .