Key Post What size is the SVR loan book and how many borrowers are there?

Brendan Burgess

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Updated 11 July 2012

It would be useful to quantify how many SVR mortgages there are and what size the loan book is. I use the term SVR to incorporate LTV as they are now paying the same rate.

In Masding's letter of 9 May he said

From 14th May we are reducing the home loan SVR and Loan to Value (LTV) Variable Rate by 0.5% to 4.69%, meaning lower mortgage repayments in almost 74,500 homes nationwide.
IL&P press statement 4 February 2011 :

The increase in the bank’s Variable Mortgage Rates will affect approximately 80,000 [37%] of the bank’s residential mortgage customers. The majority (79%) of these customers have a standard variable rate mortgage.[ presumably the balance have LTV mortgages?] This change will have no impact on customers with fixed or tracker mortgage products.

  • The average mortgage outstanding for customers with SVR Residential Mortgages is €66,137.
If €66,000 is the average balance for LTV mortgages as well, and if the average balance in July 2012 is the same as it was in Feb 2011

74,500 x €66,000 = €5 billion

However, the LTV mortgages are more recenta nd so are likely to be much larger. which would give the following estimate

60,000| SVR| €66,000|€4 billion
14,500|LTV|€200,000|€3 billion
74,500|total| |€7 billion
A 0.5% decrease in the SVR would cost permanent tsb around €350 million a year
 

Brendan Burgess

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A look at PTSB's mortgage book

I want to collect the information about PTSB's mortgage book in one post. If you have links to any information please post a reply.

Summary of book
|€m
owner occupied home loans|19,428
buy to lets|6,900
UK - mainly buy to let|7543
Commercial property|2,049
non mortgage consumer and other|1,655
Total|37,576
What is CRE?

Loan loss assessment
Central Bank 3 year projected loss
owner occupied |1,598|8.2%
buy to let|996|14.4%
90 days arrears at June 2011
owner occupied|below 8.5%
buy to let |over 9%
 

Brendan Burgess

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number of variable rate mortgages |80,000
Average balance|€66,137



Source IL&P press statement 4 February 2011

The increase in the bank’s Variable Mortgage Rates will affect approximately 80,000 [37%] of the bank’s residential mortgage customers. The majority (79%) of these customers have a standard variable rate mortgage. This change will have no impact on customers with fixed or tracker mortgage products.

  • The average mortgage outstanding for customers with SVR Residential Mortgages is €66,137.
Standard Variable rate mortgages |63,200
LTV Variable rate mortgages|16,800
Total Variable rate mortgages|80,000
The SVR is an old mortgage and was replaced by the LTV more recently. So the €66,137 figure is incomplete. What is the average value of an LTV mortgage? Probably around €250k.



80,000 is 37% of the bank's residential mortgage customers
So the total number of mortgage customers is 216,000 ( presumably owner occupied and buy to let)

Variable rate mortgages|37%
Fixed and tracker|63%
Don't know who many of the fixed become trackers, but if they do, they become expensive trackers.

How many mortgages are cheap trackers?
 

Brendan Burgess

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How many home owners have mortgages with PTSB?

|Balance|number of accounts|number of homes
Total market|116 b|786,164|614,000
PTSB|19.4 b|-|103,000
Share|16.7%||16.7%

The Mortgage Arrears stats tell us that 614,000 mortgages were worth €116 billion.
PTSB had €19.4 billion or 17% of the market
If we assume that their average size of mortgage is the same as the market, they have 103,000 home loans.
 

Brendan Burgess

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These figures don't make sense to me
The increase in the bank’s Variable Mortgage Rates will affect approximately 80,000 [37%] of the bank’s residential mortgage customers.
This means that they have around 200,000 customers in total. Assuming that includes buy to lets as well as owner occupied homes, then there should be around 146,000 owner occupied homes.

I don't think that they have 80,000 SVR customers unless they are also including the UK.

They may be confusing "homes" with "mortgage accounts". Every 100 homes have 128 mortgages attached.
 

Brendan Burgess

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38,111
Reports have suggested that tracker mortgages are costing Permanent TSB more than €400 million a year. This is because the interest rate charged on the loans – set at a fixed margin above the European Central Bank (ECB) base rate – is several percentage points lower than the cost of financing the loans. Trackers account for about 60 per cent of Permanent TSB’s €27 billion mortgage book.

Reports have suggested that tracker mortgages are costing Permanent TSB more than €400 million a year.
Irish Times Report April 2011

€27 billion ties in with the total of buy to let and owner occupied. I suspect that more of the buy to let are on trackers as investors are probably more proactive about watching prices and because PTSB had a very proactive campaign to attract professional investors with tracker mortgages.
 

44brendan

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CRE would normally refer to Credit Related Exposure. PTSB did have a leasing arm and this exposure could be included in the CRE figure together with other non-housing debt. I may be wrong on this.
Also many HL clients could have a mix of tracker & variable loans relating to the 1 property. Top ups from 2008 were generally approved at SVR's and would be classed as separate loans.
 
A

antin

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Please can you ensure when you are referring to variable mortgages that you make the distinction where possible between standard variable rate (SVR) and loan to variable rate (LTV).

I don't know when ptsb replaced the SVR with the LTV, but it is the LTV which has trapped alot of people with its current high rates.

I think ptsb are being a little disingenuous when they state that the average SVR mortgage is €66,137.
If this represents 79% of 80,000 mortgages, then 16,800 mortgages (21%) are LTV. As these would be more recent mortgages (which may go back to the peak of the boom) it is likely that the average balance would be much higher.
 

Brendan Burgess

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38,111
CRE would normally refer to Credit Related Exposure. PTSB did have a leasing arm and this exposure could be included in the CRE figure together with other non-housing debt. I may be wrong on this.
Thanks Brendan

CRE actually means Commercial Real Estate.

Also many HL clients could have a mix of tracker & variable loans relating to the 1 property. Top ups from 2008 were generally approved at SVR's and would be classed as separate loans.
So their figures probably refer to accounts, rather than homes.
 
A

antin

Guest
Thank you Brendan for updating. Based on ptsb's statement the assumption is that the variable rate is split between 63,200 SVR and 16,800 LTV.
 

Brendan Burgess

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I have updated the first post in this thread to estimate the size of the SVR book

Does it look about right?

Brendan
 
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