Ulster Bank offset mortgages are not being sold to AIB
- Thread starter Brendan Burgess
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Like a lot of things at the time, it simply wasn't fully thought through. Like what was the business model of 0.6% margin trackers? These were all about getting business in the door. If a customer built up a bit of savings in their offset, it was 2006 so they were probably going to trade up or buy an investment property, so there was going to be more lending to do! Nobody ever thought there would be customers still around in 15 to 20 years with over 50% of the remaining mortgage offset by savings.
Plus this was before IFRS9, and Basel capital requirements and all that.
There are offsets still being written in UK, but on a very different basis.
They were/are a great mortgage used correctly but I would think the bulk of customers did not avail of the full benefits of them at all, I imagine quite a small few really are offsetting the full amount. The benefits like drawing down some facility to say buy a car at home loan rates and repaying that portion at a shorter term by increasing your repayments by the amount the car loan should have cost but using home loan rate was I imagine used by few. A friend of mine has an offset and still does car finance through the usual finance companies for her new car and always has even when I explained it numerous times!
The margin over ECB on them at the time was slightly higher than equivalent standard mortgage tracker so they were slightly dearer i.e. more profitable for bank but used correctly the customer could over the long term save back that difference and more. Unfortunately I think a lot of that went in one ear and out the other for some reason! They were not an easy sell especially with the fact that they could never be fixed, people didn't like that!
Sure look at the mess that was endowment mortgages, banks didn't always know what was a good product
The margin over ECB on them at the time was slightly higher than equivalent standard mortgage tracker so they were slightly dearer i.e. more profitable for bank but used correctly the customer could over the long term save back that difference and more. Unfortunately I think a lot of that went in one ear and out the other for some reason! They were not an easy sell especially with the fact that they could never be fixed, people didn't like that!
Sure look at the mess that was endowment mortgages, banks didn't always know what was a good product
2 articles in the news today referencing offsets but unfortunately AAM won’t allow me to post links (due to not having enough lifetime posts or something like that I suppose). One is in the Irish Times (“Ulster Bank down to final €200m of deposits”) and the other is in the Irish Independent (“Unclaimed Ulster Bank savings to move into a trust when bank shuts”). Maybe someone who can post links can post them as they contain relevant information.
Thanks for the heads up, I didn't see either of those articles. A couple of interesting bits there, this one stood out to me from the IT article;
If the above is accurate, and if we take some of the other snippets of information we have on these mortgages so far (namely that there are around 5000 of these mortgages still going) you can probably guesstimate the level of offsetting that's happening. For example if each of the 5000 loans have 150K outstanding (which is probably on the high side) then the amount of mortgage debt associated with this loan book would be 750 million. If even 150 million of the 200 million in remaining deposits was being used to offset mortgages, that's 20% of the mortgage debt being offset. Which is a LOT. That doesn't strike me as a good number for Ulster Bank, with a view to making these loans attractive to another bank as a profitable loan book to take on.
Of course this is all just speculation based on snippets that may or may not be true, but it's interesting nonetheless!
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Ulster Bank down to final €200m of deposits
UK-owned bank still has to find a solution for deposits linked to so-called offset mortgages
Unclaimed Ulster Bank savings to move into a trust when bank shuts
Ulster Bank’s UK-based owner NatWest said savers in the Republic of Ireland still had £200m (€229.7m) on deposit here at the end of September, two years after it began its exit from the Irish market.
m.independent.ie
Ulster Bank mortgages to lose offset facility next year
4,500 remaining Ulster Bank customers with offset mortgages are to lose the offsetting facility on their loans in the middle of next year.
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Brendan Burgess
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I have moved the proposal to a new thread
Ulster Bank's proposal to deal with offset mortgages
press release just now Ulster Bank Provides Clarity for Offset Mortgage Customers Bank to Make Goodwill Payments to Customers as Offsetting Feature to be Removed (Monday, 27 November 2023] Today, Ulster Bank is writing to customers with Offset Mortgage products to advise them of changes...
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