Updated and corrected information on Irish Nationwide Mortgages

Brendan Burgess

Brendan Burgess

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In this thread I had strongly recommended to people to take out new home mortgages with the Irish Nationwide and to switch existing mortgages as they could expect a windfall.

This was based on the section in the Builiding Societies Act which said that windfalls could only be given to borrowers who had a mortgage at the date of demutualisation and at the previous 31 December. However, it appears from the Irish Nationwide FAQ that in the Irish Permanent and First Active demutualisation, windfalls were limited to people who had mortgages for two years. While this is not binding, I would imagine that the Irish Nationwide will follow this precedent and that the Financial Regulator would approve of it.

So, I would no longer recommend that people go to the hassle of switching to the Irish Nationwide. But I would still recommend that people consider the Irish Nationwide for new home loans if the rate is comparable.

What is the worst that can happen? You find out that you don't qualify for a windfall and you switch to another lender. As four lenders are paying for you to switch to them, this is not a big deal.

Brendan
 
Better go back on the radio to clarify to the nation as well Brendan, you said this to Matt Coopers listeners early this week :D
 
Irishpancake is right, my original post was deleted and not in a very friendly way but...
that said, Brendan has apologised and I now know I'm not going mad or seeing things! :)
 
Brendan

Firstly I have a lot of respect for you. Secondly I was quite an active poster at carpetbagger.com in the heyday of UK conversions and helped put together many a FAQ on windfalls.

IMHO, advising anyone to take a mortgage out for a windfall is plain daft. My advise then, and remains so, is take out your mortgage where it is cheapest. God only knows (and I'm not convinced he actually does) when INBS will actually convert, they've been talking about it for years.

INBS can set the qualifying date to anything they wish (When Woolwich converted they announced it early, a rush for accounts was seen and then they set the qualifying date 3 months before the rush!).

I also fail to see where the 12K yoyos windfall comes from. Play about with the figures all you want. To me 12K Yoyos is about £8.5K. No UK BS paid anywhere near that.

Personally I think a lot of Irish people are going to be disappointed with the level of windfall after the high figures quoted (but not as disappointed as the members who have accounts at the one INBS branch in London as they will get sod all!)
 
Smiler

The situation with the INBS and the Irish law is very different from the UK, so your experience there is not 100% relevant.

The size of the winfall
The UK experience or the experience with any other Building Society is totally irrelevant. The €15k has been estimated by estimating the value of the Society based on a multiple of its profits. And then dividing this by the estimated number of members. The INBS was not hugely affected by the windfall culture in the UK and so there are much fewer carpetbaggers.

The likelihood of mortgage holders getting it.
This is the key point of this thread. I thought that the precedent was in line with the Building Socities Act but apparently it wasn't. I pointed this out in December 2004 and I was not authoratively corrected until this week. My mistake lasted for for 18 months. Normally I get caught out a lot faster.

INBS can set the qualifying date to anything they wish
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They can't. They are governed in the first place by the Building Societies Act. Then the scheme has to be approved by the Financial Regulator. They would have to make a good case to depart from the model used by the First National and Irish Permanent. I would expect that the two years will be the time specified.

God only knows ... when INBS will actually convert, they've been talking about it for years.
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This is one of the key points. They will not demutualise earlier than this time next year and it could be more than two years from now.



So is it worth taking out a mortgage now?
Two years ago, I told people that they were probably too late to take out a share account as it would be demutualised within 2 years. I suggested that if they had money lying around it was as well off in the INBS as in any other deposit account.



I expect that the demutualisation will be announced around this time next year. But there are many factors which could delay the demutualisation. Unfortunately, some of those factors will also reduce the value of the windfall e.g. more serious rulings by the Ombudsman.

If the Irish Nationwide is reasonably competitive, then I would recommend them now for a home mortgage. I know of only one person who took out an Irish Nationwide mortgage for their first mortgage based on my advice and, as it happens, the Irish Nationwide was the cheapest and gave them more than anyone else. He might not get the windfall, but he has got a good deal. He can switch after a year if they are no longer competitive.

Is it worth switching?

Again, only person known to me has switched. He negotiated a discounted first year deal which was a lot cheaper than his existing mortgage. He too will switch after a year. As it turns out, he is a solicitor, so the legal costs are not a serious issue.

But unless the legal costs are very low, I would no longer recommend switching to the Irish Nationwide.
 
Brendan said:
If the Irish Nationwide is reasonably competitive, then I would recommend them now for a home mortgage. I know of only one person who took out an Irish Nationwide mortgage for their first mortgage based on my advice and, as it happens, the Irish Nationwide was the cheapest and gave them more than anyone else. He might not get the windfall, but he has got a good deal. He can switch after a year if they are no longer competitive...
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Hi Brendan,

Just wondering, whats your view on the service at INBS these days, in terms of how they act with customers etc ?

- from reading the above, you've not said anything much either way. But from past comments & actions, I'd have thought the INBS was not in your favour (nor that of many others here on AAM, in which case should the suggestion above that new borrowers consider them, go with some sort of "warning" regarding how INBS threat people when they fall into arrears etc ?)

Thanks
 
I thought that most or all of the customers affected by questionable charging practices on the part of INBS were those with loans on commercial/farm property cross secured on their PPRs rather than those with straightforward PPR loans?
 
Is there any new information regarding the expected date of new legislation which would impact on the demutualisation of Irish Nationwide?
 
Padraig said:
Is there any new information regarding the expected date of new legislation which would impact on the demutualisation of Irish Nationwide?
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See this .
 
Brendan said:
Smiler

I expect that the demutualisation will be announced around this time next year. But there are many factors which could delay the demutualisation. Unfortunately, some of those factors will also reduce the value of the windfall e.g. more serious rulings by the Ombudsman.
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Hi Brendan,

thanks for all the infos you are providing re. demutualisation and the Bill. If the bill is passed, what is the earliest (an estimate) that they can announce demutualisation? If lets say it is December of this year, will the 2 year rule exclude anyone that took out a mortgage after December 2004?

Thanks in advance to anyone that can answer,
PK.
 
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