Ulster Bank Offset Mortgage

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weston68

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I've an Offset Mortgage with Ulster Bank.
I checked in my branch and they have no info on what UB is doing with these account.
They said they will write when they have an update.
Has anyone negotiated a redemption at a discount for one of these mortgage accounts?
When I asked about a discounted redemption they would not engage.
 

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Why would they offer a redemption discount?

It might not be an overly profitable mortgage product, but it's not a loss maker.

I suspect they will come to an agreement with another institution to take these over closer to the final closure
 
Yes, I'm curious about that too.
Why would you (@weston68) expect a discount?
If the mortgage is performing then the lender will be happy to maximise their return and there's no incentive for them to offer any discount.
 
I think a lot of the talk of discounts is driven by the perceived difficulty that UB is facing with moving these mortgages on to another financial instituation when they exit this market. This difficulty is pure speculation by they way, it may or may not be real - they might have a fully baked plan in place to handle these mortgages going forward, but just haven't notifed customers yet. Plus there is the precedent of what happened with Danske and their Offset mortgages when they exited the Irish market. There are threads on this website about how people were offered discounts in the region of 30% in some cases. I think some people are living in the hope that the something similar might happen with Ulster bank.

It might not be an overly profitable mortgage product, but it's not a loss maker
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While you are undoubtedly right in the vast marjority of cases, this product can be worked by the customer where they can minimize their interest payments (or indeed pay no interest or fees on their mortgage) depending on how well the offsetting capability is being utilised. In my own case for example, I have been fully offsetting the mortgage for a few years and haven't paid a penny in interest or fees to the bank, and have no intention of doing so for the remaining term all going to plan. I don't see how the bank is making anything off this mortgage and I'm sure I'm not the only person doing this. Maybe the OP is doing something similar?
 
What is the benefit to Ulster in offering a discount to customers? Yes, they want out of Ireland and are working down their balance sheet but if even one person refuses to take a discount and close their account they must continue to operate a banking licence here. It's all or nothing. If anything the customer discount would likely end up costing the bank more. They will face the same fixed cost associated with operating a bank here plus the write down on those loans trust accepted a discount.

Of course offering a discount to another bank to take the lot is a different story. That would likely speed up the withdrawal process.
 
skrooge said:
What is the benefit to Ulster in offering a discount to customers? Yes, they want out of Ireland and are working down their balance sheet but if even one person refuses to take a discount and close their account they must continue to operate a banking licence here. It's all or nothing. If anything the customer discount would likely end up costing the bank more. They will face the same fixed cost associated with operating a bank here plus the write down on those loans trust accepted a discount.

Of course offering a discount to another bank to take the lot is a different story. That would likely speed up the withdrawal process.
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I agree, I think it's unlikely that they will go down the route of engaging with individual account holders with a view to try and entice them to close their accounts with a discount.

If they do sell to another bank then I do think UB will have to take a big hit on these mortgages. The purchasing bank will need to support the same features and conditions that UB currently offer with these mortgages. I'm not aware of any other Irish bank that offers Offset mortgages, which probably means that the purchasing bank would need to build that capability. Having had some experience of IT projects in Irish banks, they can be time consuming, costly and painful. The purchasing bank would be factoring all that in, as well as the fact that the margin on these mortgages is probably not as healthy as it is on standard mortgages. If UB do find a bank willing to take these on, they'll need to discount big.

So if anybody is set to make a nice deal out of all this, it's more likely to be another bank rather than Joe Bloggs unfortunately.
 
Like you say these loans will be trickier to operate and like you say the discount will need to be large to entice an existing bank into buying. The question is how much of a discount would another bank need and how would that discount compare to the cost Ulster would face by just running the book down.

From an Ulster perspective it made sense to sell the easy to value portfolios first. without selling that there was no point trying to leave. Also any discount on the offset book might have undermined the price they could get for the fast bigger tracker and regular mortgage book.
 
No need for a new thread

Ulster Bank offset mortgages are not being sold to AIB

I wrote to Ulster Bank and got this reply We are currently writing to customers with an Offset mortgage to confirm that their loan is not part of the transaction with AIB or the transaction with PTSB, and that the ‘Choose Move Close’ action does not apply to them at this time. If their Offset...
www.askaboutmoney.com
 
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