Brendan Burgess
Founder
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what's so good about this article?
She doesn't even mention the interest rate when she took out her mortgage.
Her complaint is not so much the interest rate but the fact that others are paying less.
She doesn't mention that PTSB is still a loss making bank or that arrears are the real reason for her plight!
what's so good about this article? Extraordinarily tendentious!
She doesn't even mention the interest rate when she took out her mortgage. Her complaint is not so much the interest rate but the fact that others are paying less.
The parable of the vineyard workers comes to mind
She doesn't mention that PTSB is still a loss making bank or that arrears are the real reason for her plight!
Futures I fail to see the point of your comment. Is your motive to pick holes in this excellent personal article or to support this campaign?
Are you personally affected and what are doing to rectify situation?
This is a slight weakness in Sara's argument. It implies that the Permo are not charging her over the "market rate", she is unable to refinance in the market. She appears to approve of other differentiating factors such as LTV but does not accept that income capacity should be such a factor.Sara said:When our third child came along, it no longer made financial sense for me to continue working. As a result, we would no longer meet the lending criteria to allow us to switch to another lender; we are, in effect, prisoners of Permanent TSB.
Why should she be paying more than ptsb's new customers?
Why should she be paying more than ptsb's new customers?
Why should she be paying more than the average mortgage rate in the Eurozone?
It is very simple, she bought the product at a different time and price, so there is no reason to expect the product to be the same as the current offering. If we were talking about a car rather than a financial product, would she be demanding that the car dealer go fit the same features to cars they have already sold??? or perhaps give a rebate because the price of steal has dropped since she bought the car. Of course not.
Because the products are not the same! For instance in Germany most banks will only offer 70% of their assessed value of the property, which may be very different to the current market rate and the time scale is usually 10 years. On top of this you need to substantial other assets and income before they'd consider you, so a 20% deposit and nothing left in the savings account would not fly. The reality is that most Irish mortgages would be considered subprime in a Euroland context and would have to pay substantial higher rates than the average in any case.
Sara states that she cannot refinance because she does not meet the income requirements. That to me is the ultimate form of applying LTI criteria1) "Sara is not the same as the others because she does not meet the Loan to Income criteria"
Irish lenders do not give lower rates to people with lower LTI ratios. The main risk comes from LTV and that is how the lenders price their mortgages. Sara is a 60% LTV customer with a clean ICB record. I see no reason for justifying a higher charge for her.
But even if this were justified, the reality is that the bank ignores the LTI ratio. New customers get better rates than existing customers with the same LTV and LTI ratios. That is fundamentally unfair.
Hi Jim
That comparison is not appropriate at all. If I buy a car today for €20,000 and a year later, the price drops to €18,000, I have no case.
But that is a one off purchase.
A loan agreement is a continuing agreement. Existing customers should be given the same terms as new customers.
However, 60% LTVs are very low risk and I think that they should be priced at levels similar to the Eurozone average.
Jim I gotta agree with the Boss on this. We are talking about the Standard Variable Rate, you seem to be addressing fixed rate financing. The idea is that the rate should vary in line with the cost of funds, the Tracker Mortgage being the epitome of the genre.On the contrary, a bank builds a financial product in a similar way to a car manufacturer builds a car. They will try so far as possible to lock down the financing for the product and the income stream at the point of sale, just like a car dealer. So yes products created and sold during periods when financing cost were high will cost more than ones created and sold during periods when financing is cheap. There is nothing new in this and Ireland is not some kind of special case! It's the same in Germany or Switzerland for that matter, I pay a higher mortgage rate than my neighbour because I financed several years ago, where as he only took out his loan last year. That is just how it is.
1)
New customers get better rates than existing customers with the same LTV and LTI ratios. That is fundamentally unfair.
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