Permanent TSB extortionate rate on SVR

Kev.

Permanent TSB are charging a disgraceful 5.2% on Standard Variable Rate mortgages,

AIB are charging around 3%- These two banks are state owned.

This rate is the highest in Europe as far as I know...

Disgraceful behaviour from PTSB,The Central Bank and the fine Minister Noonan.

I fed figures into http://www.loanclc.com/ and came up with the following...
A person with a E 300.000 mortgage over 25 years will be paying.....
PTSB - E1,788.90
AIB - E1,422.63

---

A difference of around E360 a Month. Just because they are with a different bank.......This isnt the real figure though because a person with an AIB Mortgage pays off more capital each month so all in all it works out at around E500 a month over the lifetime

Over their mortgages a PTSB customer will pay around E110,000 more that an AIB customer for the EXACT same loan.

A person who is with PTSB cannot move mortgage because no banks are accepting switchers...they are stuck

Any opinions/thoughts?

How is our economy meant to recover when people are paying these rates to banks...
20,000 people are on SVR with PTSB and another 20,000 are coming into it when their fixed rate expires...

AlekSmart

Kev. wrote: »

Permanent TSB are charging a disgraceful 5.2% on Standard Variable Rate mortgages,

AIB are charging around 3%- These two banks are state owned.

This rate is the highest in Europe as far as I know...

Disgraceful behaviour from PTSB,The Central Bank and the fine Minister Noonan.

Any opinions/thoughts?

How is our economy meant to recover when people are paying these rates to banks...
20,000 people are on SVR with PTSB and another 20,000 are coming into it when their fixed rate expires...

Good point,as a long-time mortgage and shareholder (:o) of PTSB I am quite concerned at the,by now,regular notices of adjustment I recieve for my monthly contribution to Gill's sunglases budget.

I continue to hold my 300 shares in full expectation of a reversal of fortune....soon....:P

highgiant1985

you might like to read this forum on askaboutmoney so :P Lots of info on the PTSB SVR

http://www.askaboutmoney.com/forumdisplay.php?f=113

I'm not a huge fan of the site as I think politics/boards is better but still worth a read.

Sponge Bob

Kev. wrote: »

P
Any opinions/thoughts?

Yeah, €300k mortgage are old hat. They will generally be anywhere from €50k to €150k in future.

Godge

Did nobody ever listen to or read the bit in the advertisements where it said that mortgage rates could go up or down? It was always in the small print as well and if you were ever going to read the small print, it should have been for the biggest loan you were ever going to take out.

Why are people surprised that

(1) Mortgage rates actually did go up
(2) Banks need to make money and if, like any business, they have a customer they can make money from, they will.

the groutch

they've gotten a very tracker-heavy loan book, so they need to charge a much higher rate to cover just to achieve an overall interest rate similar to other banks

AlekSmart

What's a tracker mortgage....?

Do we have any idea of why exactly PTSB is so Tracker Heavy as opposed to the rest of our exotic bunch of Bankers ?

jased10s

promised not to come back to this sad place but hey.

godge
"Did nobody ever listen to or read the bit in the advertisements where it said that mortgage rates could go up or down? It was always in the small print as well and if you were ever going to read the small print, it should have been for the biggest loan you were ever going to take out.

Why are people surprised that"

(1) Mortgage rates actually did go up
(2) Banks need to make money and if, like any business, they have a customer they can make money from, they will. "

apparantly the bond holders take a gamble and dont lose, the banks give loans and get others pay for it's losses on trackers.

surprised Godge , we are not surprised we are being screwed.

Thanks for the backup mate.

It was a home after all and not off the plans making a quick buck.

PTSB have the highst interest in the EU.

But hey money we spend on the interest we cant spend in shops.

take into account the USC ( 3000 last year ) and health levy ( paid 400 this year ) insurance levy ( 100 this year ) just for myself ( could add more but dont have figures at hand ).

and levy levy levy.

And also my partner paid more levies

It was a home after all and a modest one at that.

Up or down of a rate we can handel but sheer rape is a bit much ( a bank we own apparantly !! )

So if the banks are in a bind and charge me more, then can i go to my employer and demand more to cover the loss ?

We only want a fair deal , but sympanthy is far from coming, not that i expecet it in this ****ed country.

hope you dont need help Godge , because you attitude is typical of this country , look after your own hole.

Also my partner paid more than me in the above because she earns more then me , so in total we are very highly levied ( x above by 2 and add some ).

No burden to the state and no kids and claims but still paying ..

Quote
(2) Banks need to make money and if, like any business, they have a customer they can make money from, they will "

Where do i make my money from ????

Kev.

Godge wrote: »

Did nobody ever listen to or read the bit in the advertisements where it said that mortgage rates could go up or down? It was always in the small print as well and if you were ever going to read the small print, it should have been for the biggest loan you were ever going to take out.

Why are people surprised that

(1) Mortgage rates actually did go up
(2) Banks need to make money and if, like any business, they have a customer they can make money from, they will.

I think you've missed the point totally Godge

Yes Variable rates can go up or down,but for one state owned bank(PTSB) to charge 5.2% and another 3%(AIB) is disgraceful.....
A difference of 500 Euro a month to some people...

Yes banks need to make money but to overcharge customers to a point where they get into trouble on Mortgage payments is sickening.

Nody

Kev. wrote: »

I think you've missed the point totally Godge

Yes Variable rates can go up or down,but for one state owned bank(PTSB) to charge 5.2% and another 3%(AIB) is disgraceful.....
A difference of 500 Euro a month to some people...

Yes banks need to make money but to overcharge customers to a point where they get into trouble on Mortgage payments is sickening.

I agree, AIB should charge 5.2% as well as that's closer to reality and the home owners should pay their own bill instead of asking for everyone else to chip in to pay for their sacred home...

Oh and for the rates being highest in Europe? Not by a long shot; Halifax for example starts their variable rate at 5.29%

jased10s

Nody wrote: »

I agree, AIB should charge 5.2% as well as that's closer to reality and the home owners should pay their own bill instead of asking for everyone else to chip in to pay for their sacred home...

Oh and for the rates being highest in Europe? Not by a long shot; Halifax for example starts their variable rate at 5.29%

Ok so if they all started charging the above rate and make a profit , does the tax payer and owner get a share of the said profit ? As we own the banks apparantly.

I think not.

And nody you know nothing.

No one is asking for a bill pay , Hold on we paid a non losing gamble to the bankers..

jased10s

the groutch wrote: »

they've gotten a very tracker-heavy loan book, so they need to charge a much higher rate to cover just to achieve an overall interest rate similar to other banks

so do i go to my employer and ask for more wages because i have to pay out more ?

The extra 400 + a month difference means we would spend in the shops that would stimulate the ecomony.. but hey let the banks have it.

Kev.

Nody wrote: »

I agree, AIB should charge 5.2% as well as that's closer to reality and the home owners should pay their own bill instead of asking for everyone else to chip in to pay for their sacred home...

Nody,

I have never in my life asked anybody to pay my bill or pick up my tab for my house,that accusation doesn't sit well with me and is a bit disrespectful..

I pay my mortgage every month on time and in full,but my issue is that I will end up paying around 140,000 euro more than somebody who is with AIB..

Yes Nody thats 140,000 Euro in real money

These banks are owned by the state and the government wont do anything to rectify the problem.

If it means the 2 banks charge 5.25%,then so be it...Id have no problem with it

But to charge 2% more is unfair and scandalous...

Charlie Weston has a good article on the problem at hand in todays Indo

http://www.independent.ie/national-news/central-bank-puts-pressure-on-ptsb-to-cut-variable-rates-3023880.html

AlekSmart

Nody wrote: »

I agree, AIB should charge 5.2% as well as that's closer to reality and the home owners should pay their own bill instead of asking for everyone else to chip in to pay for their sacred home...

Oh and for the rates being highest in Europe? Not by a long shot; Halifax for example starts their variable rate at 5.29%

I see and accept Nody's point re the "Sacredness" of the place of your own in Irish mainstream culture.

I remain totally unconvinced that the eventual ownership of my humble 3 bed semi in South Dublin will have been worth the added burden which meeting 30 years of PTSB's commercial requirements levied upon me.

I have little doubt but that if I had been able to secure a European model of secure tenancy with lower rental amounts,regulated tenancy agreements and a generally more civilized attitude,I would have politely sent the PTSB agent on her way to sucker some other gilly into their honeypot.

However,this being modern Ireland,we had a somewhat different perception and attitude toward life and living it.

This allowed successive Irish Governments to TOTALLY ignore what was/is the norm in how regular Europeans live their quite productive,regulated and largely functional lives.

What we now have in Éirinn is a generation of young(ish) people whose ability to live a similarly functional,productive life is frustrated by gigantic levels of personal debt,mostly (although not totally) centred upon resedential property.

Yet,even today,we maintain the pretence that universal property ownership is achievable,without even pausing to ask ourselves if,in the Irish context,it is either sustainable or desirable.

The current debate appears to revolve around when exactly,we will see buyers returning to the market...rather than the State perhaps asking if this phenomena is really what the Country needs.

I believe that the Irish State needs to actively engage with promoting,encouraging and,perhaps,directly providing the type of Long Term Secure Rental Market which contributed in no small way to Europes achievement in putting two World Wars behind it and getting on with the business of living.

LostinKildare

Nody wrote: »

Oh and for the rates being highest in Europe? Not by a long shot; Halifax for example starts their variable rate at 5.29%

That's not their variable rate -- that's a TRACKER rate for new business first-time buyers with less than 25% deposit down. Their way of telling you that they're not interested in giving you a tracker mortgage (as opposed to PTSB's ceasing to offer any tracker rate).

Halifax's variable rate -- it's listed on the same table you linked to -- is 3.99%, a great deal below PTSB's 5.19%.

Compare like with like.

Nody

jased10s wrote: »

The extra 400 + a month difference means we would spend in the shops that would stimulate the ecomony.. but hey let the banks have it.

Good idea, lets ask the government to give everyone 1k extra a month to spend; that will fix the economy! Oh wait, they are already doing that...

Let me try to put this in simple terms, banks loan cost equals X (this X has to include the cost to loan on the market and not some quasi state version of it like it is today, cost for defaults on their loan book, cost for unsecure loans, returning the bloody money pumped into them which I personally disagreed with then and now, salaries, overheads etc.). If the banks offers loans below X the bank loses money, money which it has to recover from either it's owners (the tax payers, i.e. my original point about asking for tax payers to foot your loan bill) or increasing the money it makes from the loans to exceed X. Now do I believe 3% can cover X, esp. with an Irish bank? Not by a long shot; ergo, AIBs rate is to low and if you think 3% is somehow normal then you're far off from reality.

Head The Wall

jased10s wrote: »

Ok so if they all started charging the above rate and make a profit , does the tax payer and owner get a share of the said profit ? As we own the banks apparantly.

I think not.

And nody you know nothing.

No one is asking for a bill pay , Hold on we paid a non losing gamble to the bankers..

Theoretically all tax payers own the banks but not all taxpayers are mortgage holders. I was not one of the cabal that drove prices higher and higher by providing demand for said "roof over my head" and causing the massive debt problem. Yes the govt is already providing support via the bank bailout etc but this should be limited as much as possible. I would much prefer mortgage customers paid up here instead of non mortgage holders.

AlekSmart

Head The Wall wrote: »

Theoretically all tax payers own the banks but not all taxpayers are mortgage holders. I was not one of the cabal that drove prices higher and higher by providing demand for said "roof over my head" and causing the massive debt problem. Yes the govt is already providing support via the bank bailout etc but this should be limited as much as possible. I would much prefer mortgage customers paid up here instead of non mortgage holders.

As a fully mortgaged customer myself I'd support HTW's pov here.

However,we have only reached this place by virtue of successive Irish Governments behaving in a wantonly unrelastic manner.

This Policy,driven by highly questionable politico/business interaction between administrators,developers and sadly,a misinformed deluded public,of which I am one,led Ireland to the brink,from which in late 2008,we were all thrown off.

HTW's "cabal" was more than that,it was all encompassing and deeply rooted in Irish life and sadly for Ireland,like a rotten impacted wisdom tooth,it will require removal,with or without anesthetic :eek:

Godge

jased10s wrote: »

hope you dont need help Godge , because you attitude is typical of this country , look after your own hole.

Also my partner paid more than me in the above because she earns more then me , so in total we are very highly levied ( x above by 2 and add some ).

No burden to the state and no kids and claims but still paying ..

http://www.independent.ie/national-news/banks-tell-thousands-in-trouble-cut-health-cover-3023872.html


Look at that article. People in trouble are refusing to give up their private schools, their health insurance, their food shopping in M&S and their Sky Sports. Some of us never had those but we are the ones not in trouble. It is hard to feel sympathy when you read articles like that when I know people struggling who live in rental accommodation and never had those luxuries. I know who I have sympathy for and it is not people who are on their way to owning an asset like a house, it is for those who have never had the chance to own their own house and who likely never will.

murphaph

Godge wrote: »

http://www.independent.ie/national-news/banks-tell-thousands-in-trouble-cut-health-cover-3023872.html

Christ almighty is all I can say. If banks weren't insisting on people ditching sky sports and private schools I'd be pretty annoyed. Where on earth do some people get their sense of entitlement?

Sponge Bob

South Dublin is, ummmm, different!

jased10s

Godge wrote: »

http://www.independent.ie/national-news/banks-tell-thousands-in-trouble-cut-health-cover-3023872.html


Look at that article. People in trouble are refusing to give up their private schools, their health insurance, their food shopping in M&S and their Sky Sports. Some of us never had those but we are the ones not in trouble. It is hard to feel sympathy when you read articles like that when I know people struggling who live in rental accommodation and never had those luxuries. I know who I have sympathy for and it is not people who are on their way to owning an asset like a house, it is for those who have never had the chance to own their own house and who likely never will.

no private school here ( i posted before no kids ) and no m&s ( aldi here ) and my rent was the same as morgage when i took it out ( despite ptsb best efforts to quash that ). You seem to dislike people who aspire to actually owning than renting a small abode. My house is managable and not big and i prefer to no piss my money in rent. This is about interest rates.
Oh and my employer payes my insurance, the dole people get a medical card which i do not , so i pay €60 a doctors visit ( not that i can i just ignore medical issues )

It's quite amazing you wake up 1 year to be told 7 % of your wages go in USC and also the bank wants extra to cover their trackers.
i wish i could go to my employer and say give me 10k more because the banks think i have that to spare.

Head The Wall

jased10s wrote: »

It's quite amazing you wake up 1 year to be told 7 % of your wages go in USC.

That would be quite amazing indeed, if it was true. Its not though, it's 7% after 16k.

I think the point Godge is trying to get across is that a lot of people are realising that they can't afford to own a house but they don't want to accept that fact. The wage levels during the temporary boom fooled a lot of people into thinking the opposite unfortunately.

Sarn

jased10s wrote: »

i prefer to no piss my money in rent. This is about interest rates.

Unfortunately, instead of "pissing" your money on a provided service that you could change according to your means, you chose to spend it on an interest charge that you have no control over.

I agree with you in that the discrepancy in SVR between state owned banks is wrong. As Nody pointed out, the problem is that it is the low AIB rate that is incorrect. One possible solution could be to normalise out the SVR between the various State owned banks over a period of time, although I'm not sure if the government could interfere in that way. This would spread the pain between a portion of mortgage holders. The downside is that this would create an uproar from those with an AIB SVR.

ArmaniJeanss

Kev. wrote: »

Permanent TSB are charging a disgraceful 5.2% on Standard Variable Rate mortgages,


This rate is the highest in Europe as far as I know...

Have you any proof of this? (not accusing you of lying, would be genuinely interested in the data).

Rightly or wrongly I've always had the belief that Irish mortgage rates are low and that 5% plus is fairly standard in central europe.

Very hard to find any actual comparison data though.

3DataModem

Irish interest rates are unbelievable low and have been so for 10 years. The idea that 5% is somehow "extortionate" in it's own right is just wrong.

Secondly, the cost to the bank of the capital
Is way over 5.2% (as they are government backed). In any other era they would have jacked the rate up to 8/9/10 but they are being held back from doing this as they (i.e. the government) don't want mass defaults.

It may be unfair that one bank is cheaper than another... I don't disagree with this... but back in the 70s, 80s and 90s people used to dream about single-digit rates.

AlekSmart

jased10s wrote: »

. You seem to dislike people who aspire to actually owning than renting a small abode. My house is managable and not big and I prefer to not piss my money in rent. This is about interest rates.

This is,for me,the epitome of the "Irish Attitude" to the entire property scenario..."if it's built,ye have to own it" .

However,what is now becoming apparent,is that universal property ownership will bring with it, accompanying universal property ownership responsibilities,mainly,but not totally, financial.

It is only the slowly dawning realization that property one purchases today,will bring with it a continuing and increasing level of contributions and charges which eventually will motivate the property owning mases to perhaps reconsider their fixation.

The concurrent Irish problem,and it is a very real one,is that our Governments have,as yet,exhibited no great understanding of the benefits of promoting a sound,well administered and regulated Private Rental market......Why ?

Godge

jased10s wrote: »

no private school here ( i posted before no kids ) and no m&s ( aldi here ) and my rent was the same as morgage when i took it out ( despite ptsb best efforts to quash that ). You seem to dislike people who aspire to actually owning than renting a small abode. My house is managable and not big and i prefer to no piss my money in rent. This is about interest rates.
Oh and my employer payes my insurance, the dole people get a medical card which i do not , so i pay €60 a doctors visit ( not that i can i just ignore medical issues )

It's quite amazing you wake up 1 year to be told 7 % of your wages go in USC and also the bank wants extra to cover their trackers.
i wish i could go to my employer and say give me 10k more because the banks think i have that to spare.

(1) I have a mortgage myself and am buying a house so I don't hate myself. I feel privileged to be in the position that I can afford to buy my own property when so many in Ireland and elsewhere can only dream of that.
(2) It is not amazing to wake up one year to be told interest rates and taxes are going up. Anyone with half a grip on reality and a little bit of research knew that interest rates and the tax burden were at historical lows by the middle of the noughties so the only way was up.

Icepick

jased10s wrote: »

My house is managable and not big and i prefer to no piss my money in rent.

Why would you be pissing money in rent?

thebman

AlekSmart wrote: »

The concurrent Irish problem,and it is a very real one,is that our Governments have,as yet,exhibited no great understanding of the benefits of promoting a sound,well administered and regulated Private Rental market......Why ?

Most of our politicians push the renting is dead money agenda (or the need to help first time buyers) and the the mantra that we must do everything in our power to re-inflate the property bubble (or in their words, restore a healthy property market) and on an unrelated note are also heavily invested in property themselves so no conflict of interest here

LostinKildare

Nody wrote: »

Let me try to put this in simple terms, banks loan cost equals X . . .Now do I believe 3% can cover X, esp. with an Irish bank? Not by a long shot; ergo, AIBs rate is to low and if you think 3% is somehow normal then you're far off from reality.

3DataModem wrote: »

Secondly, the cost to the bank of the capital is wayover 5.2% (as they are government backed).

Hmm, the Central Bank disagrees with you.

Now the Central Bank has admitted it is applying pressure on lenders charging higher interest rates. Regulators did not name Permanent TSB but said in a statement yesterday: "We are engaging with specific lenders who appear to have standard variable rates set disproportionately high compared with the cost of funds through our existing powers of suasion."
http://www.independent.ie/national-news/central-bank-puts-pressure-on-ptsb-to-cut-variable-rates-3023880.html

In November the CB published a report titled "Variable Mortgage Rate Pricing in Ireland" in which it estimated the funding costs across Irish banks to be 2.6%.
5.2 - 2.6 = 2.6% That's a damn good margin PTSB is making on SVR loans, way out of whack with the 1.4 percentage-point mark-up over funding costs which has been standard across Irish banks.
The report found that:

Changes in the rate of mortgage arrears also drive changes in variable rates, controlling for funding costs.
It appears that some lenders are charging higher variables rates to compensate for the losses they are making on their tracker loans. . . .
One bank's (A) variable rates are significantly lower and another bank's (F) variable rates are significantly higher than its peers, controlling for funding costs, arrears rates and other factors.
http://www.centralbank.ie/press-area/press-releases/Documents/Variable Rates-final2.pdf

PTSB is gouging captive SVR customers to pay for the bank's losses on other people's loans.

And I do mean gouging. In the aftermath of a natural disaster like a flood or earthquake, govts step in to prevent businesses from price gouging when the competitive economy collapses. Well, we've have an economic disaster; free-market competition has pretty much collapsed, since transferring your mortgage to another bank is impossible for almost everyone (negative equity, loss of income). Yet the state is leaving citizens to the mercy of a state-owned bank.

Head The Wall wrote: »

Theoretically all tax payers own the banks but not all taxpayers are mortgage holders. I was not one of the cabal that drove prices higher and higher by providing demand for said "roof over my head" and causing the massive debt problem. Yes the govt is already providing support via the bank bailout etc but this should be limited as much as possible. I would much prefer mortgage customers paid up here instead of non mortgage holders.

I see we've moved on a bit from "we all partied." Now, anyone in Ireland who holds a mortgage is part of the "cabal" that ruined the country.

C'mon, let's not demonise anyone who bought a house in the last 20 years. Indeed, 70% of mortgages that originated before 2001 are variable rate loans. These are the people that have been trapped by PTSB into carrying the can for the bank's tracker mortgages/bad loans from the late Celtic Tiger --- reckless loans that did fuel the boom/bust.

It's disgraceful that these people are forced to pay so much more than other Irish citizens --- hundreds of euros more every month --- to prop up a state-owned bank.

liammur

Kev. wrote: »

Permanent TSB are charging a disgraceful 5.2% on Standard Variable Rate mortgages,

AIB are charging around 3%- These two banks are state owned.

This rate is the highest in Europe as far as I know...

Disgraceful behaviour from PTSB,The Central Bank and the fine Minister Noonan.

I fed figures into http://www.loanclc.com/ and came up with the following...
A person with a E 300.000 mortgage over 25 years will be paying.....
PTSB - E1,788.90
AIB - E1,422.63

---

A difference of around E360 a Month. Just because they are with a different bank.......This isnt the real figure though because a person with an AIB Mortgage pays off more capital each month so all in all it works out at around E500 a month over the lifetime

Over their mortgages a PTSB customer will pay around E110,000 more that an AIB customer for the EXACT same loan.

A person who is with PTSB cannot move mortgage because no banks are accepting switchers...they are stuck

Any opinions/thoughts?

How is our economy meant to recover when people are paying these rates to banks...
20,000 people are on SVR with PTSB and another 20,000 are coming into it when their fixed rate expires...

Nice to see this bank being put under pressure. They scorched shareholders, and treat their customers with contempt.

LostinKildare

liammur wrote: »

Nice to see this bank being put under pressure. They scorched shareholders, and treat their customers with contempt.

It's a step, but it's a weak step. Every month that Noonan, Elderfield et al faff about asking PTSB to pretty please consider cutting their rate, people are struggling -- and perhaps finally failing, thus becoming burdens on the taxpayer -- to meet these mortgages payments that have been jacked up to cover the bank's losses on other people's loans.

For goodness' sake, the state is a 99% shareholder in this bank. Just tell them to do it, and if they don't, replace the whole board with people who will!

This must be nipped in the bud. It's not just about PTSB variable customers -- the other banks are eyeing this up and looking to get in on the game, too. In today's Independent, Bank of Ireland makes noises about their plan to burden their captive SVR customers with their losses from the new insolvency rules introduced by the govt:

THOUSANDS of homeowners face higher mortgage repayments because of new personal insolvency rules, it emerged last night.
The new rules mean some of the most hard-pressed households will get part of their mortgage debt written off.
But other customers face the prospect of higher interest rates on their mortgages, as banks cushion themselves against the risk of these losses.
Any rise in rates would hit those customers on variable mortgages, while people with tracker mortgages would not be affected.
Bank of Ireland boss Richie Boucher yesterday admitted he was looking at raising the interest rates on home loans to compensate for this added "risk".
He said the new insolvency laws, due later this year, could mark a "fundamental" change in the playing field for banks and make mortgage lending more risky.
"We price for risk," he said, implying that the cost could be passed on to customers in the form of higher interest rates.
It would mean that the bank increases its variable interest rate for existing customers, or charges a higher rate to new borrowers -- potentially putting the bailed-out bank on a collision course with the Government.
However, it is highly likely other banks will be thinking along the same lines, and if Bank of Ireland moves to increase its rates then it will set a precedent.
It is understood at least one other bank is considering similar measures.
Bank of Ireland gave out half of Ireland's new mortgages last year.
About a third of Bank of Ireland's mortgage holders are on variable rates, and at a typical rate of between 3.4pc and 3.84pc are already paying almost double the interest of those with tracker mortgages.
People on tracker mortgages will not be hit by any rises instigated by the banks as the European Central Bank controls tracker rates.
The threat of higher interest rates comes a week after international ratings agency Moody's said up to a quarter of the mortgages in Irish banks were vulnerable to being written down under the new insolvency rule, which could trigger "widespread debt forgiveness".
http://www.independent.ie/business/personal-finance/latest-news/mortgage-hike-threat-to-cushion-bank-debt-3025301.html

liammur

LostinKildare wrote: »

It's a step, but it's a weak step. Every month that Noonan, Elderfield et al faff about asking PTSB to pretty please consider cutting their rate, people are struggling -- and perhaps finally failing, thus becoming burdens on the taxpayer -- to meet these mortgages payments that have been jacked up to cover the bank's losses on other people's loans.

For goodness' sake, the state is a 99% shareholder in this bank. Just tell them to do it, and if they don't, replace the whole board with people who will!

This must be nipped in the bud. It's not just about PTSB variable customers -- the other banks are eyeing this up and looking to get in on the game, too. In today's Independent, Bank of Ireland makes noises about their plan to burden their captive SVR customers with their losses from the new insolvency rules introduced by the govt:

Actually, Noonan just wanted to wipe the shareholders so the state would get Ir Life.

It's now in the state's interests that the bank charges higher rates, so pressure needs to be put on them.

LostinKildare

liammur wrote: »

Actually, Noonan just wanted to wipe the shareholders so the state would get Ir Life.

It's now in the state's interests that the bank charges higher rates, so pressure needs to be put on them.

Yep, just as it would be in the interest of a shop owner to charge customers 20 euros for a liter of milk and 50 euros for bread after a disaster when they cannot get those necessities anywhere else.

But there is a tipping point. At some stage you can't buy bread anymore and you starve or you riot.

In the scenario where you're being soaked for mortgage payments, you probably won't riot (though IMO if ever there was a good reason for a targeted mortgage strike, this is it), but you lose your tenuous grip on self-sufficiency and then you become dependent on the rest of the taxpayers to bail you out in one way or another.

The more I think about this ... how is this not a criminal offence? Section 5 of the Competition Act 2002
"prohibits the abuse of a dominant position. It is important to recognise that it does not prohibit a dominant position - only its abuse. Generally a firm is considered to be dominant if it is able to act without taking account of the reaction of its customers or its rivals, e.g. a firm which can increase its prices unilaterally because it knows that its customers have few if any satisfactory alternative sources of supply and therefore little choice but to pay the higher price."
http://www.tca.ie/EN/Enforcing-Competition-Law/Competition-Law.aspx

Any thoughts?

liammur

LostinKildare wrote: »

Yep, just as it would be in the interest of a shop owner to charge customers 20 euros for a liter of milk and 50 euros for bread after a disaster when they cannot get those necessities anywhere else.

But there is a tipping point. At some stage you can't buy bread anymore and you starve or you riot.

In the scenario where you're being soaked for mortgage payments, you probably won't riot (though IMO if ever there was a good reason for a targeted mortgage strike, this is it), but you lose your tenuous grip on self-sufficiency and then you become dependent on the rest of the taxpayers to bail you out in one way or another.

The more I think about this ... how is this not a criminal offence? Section 5 of the Competition Act 2002
"prohibits the abuse of a dominant position. It is important to recognise that it does not prohibit a dominant position - only its abuse. Generally a firm is considered to be dominant if it is able to act without taking account of the reaction of its customers or its rivals, e.g. a firm which can increase its prices unilaterally because it knows that its customers have few if any satisfactory alternative sources of supply and therefore little choice but to pay the higher price."
http://www.tca.ie/EN/Enforcing-Competition-Law/Competition-Law.aspx

Any thoughts?

The problem is the government are too short sighted. They don't give a damn about people struggling. Noonan could tell us it's a lifestyle choice.

ArmaniJeanss

LostinKildare wrote: »

a firm is considered to be dominant if it is able to act without taking account of the reaction of its customers or its rivals, e.g. a firm which can increase its prices unilaterally because it knows that its customers have few if any satisfactory alternative sources of supply and therefore little choice but to pay the higher price."
http://www.tca.ie/EN/Enforcing-Competition-Law/Competition-Law.aspx

Any thoughts?

I don't think 'dominant position' or 'monopoly' rules apply here, as the customer is at liberty to take his mortgage business to any of the other bank/building societies.

LostinKildare

ArmaniJeanss wrote: »

I don't think 'dominant position' or 'monopoly' rules apply here, as the customer is at liberty to take his mortgage business to any of the other bank/building societies.

But that's just it --- no they can't. Negative equity, as well as unemployment, and for those who still have jobs, cuts to wages and/or job instability make it impossible for the vast majority of mortgage holders to move to another bank. If any of these factors affects you, no other bank will look at you.

The competitive market has collapsed. If this were not so, PTSB would not be charging this rate, because everyone would flee it.

ArmaniJeanss

LostinKildare wrote: »

But that's just it --- no they can't. Negative equity, as well as unemployment, and for those who still have jobs, cuts to wages and/or job instability make it impossible for the vast majority of mortgage holders to move to another bank. If any of these factors affects you, no other bank will look at you.

The competitive market has collapsed. If this were not so, PTSB would not be able to charge this rate, because everyone would flee it.

Its an interesting point alright, there are plenty of alternates but none of them actually want your business. So does that make PTSB a racketeer?

I guess if a pub in Dublin charged €10 a pint this would be ok as every other pub is still charging €5. However if you were barred from every other pub then suddenly it seems extortionate.

I honestly don't know, might be worth posting on the legal board?

Godge

LostinKildare wrote: »

But that's just it --- no they can't. Negative equity, as well as unemployment, and for those who still have jobs, cuts to wages and/or job instability make it impossible for the vast majority of mortgage holders to move to another bank. If any of these factors affects you, no other bank will look at you.

The competitive market has collapsed. If this were not so, PTSB would be charging this rate, because everyone would flee it.

Of course you could switch, you would probably need someone to go guarantor and the new bank would probably charge you a higher rate but you could switch.

Take somebody who has car insurance, crashes the car three times in a year, all his own fault, comes to renewal time, the insurance company has to give him a quote, €4,000, more than the value of his car. No other insurance company will touch him. He can't move except for an exorbitant charge.

LostinKildare

Godge wrote: »

Of course you could switch, you would probably need someone to go guarantor and the new bank would probably charge you a higher rate but you could switch.

Take somebody who has car insurance, crashes the car three times in a year, all his own fault, comes to renewal time, the insurance company has to give him a quote, €4,000, more than the value of his car. No other insurance company will touch him. He can't move except for an exorbitant charge.

What a ridiculous response. We are talking about the ability to switch in order to pay less, not more. FFS, why would a consumer seek a higher rate?

Do you understand competitition at all?

Godge

LostinKildare wrote: »

What a ridiculous response. We are talking about the ability to switch in order to pay less, not more. FFS, why would a consumer seek a higher rate?

Do you understand competitition at all?

But if every other bank would charge you as a new customer a much higher rate and seek guarantees because of the risk you carry because of negative equity, then you are getting a good deal with your existing bank! The requirement to have a cheaper rate available to you elsewhere is not a sign of competition. That is why bad drivers get stuck with the same insurance company and people who can't afford to repay loans get stuck with the same bank. It is a function of the mortgage-holders personal circumstances that prevents them getting a cheap loan, not the banks.

I am quite sure that if I was a permanent civil servant with €60,000 in cash saved and no other debt, I could get a good deal on a mortgage from any of the banks and they would be falling over themselves to loan to me. Unfortunately, I am not but the competition is there, it is just some people have put themselves into the position of not being able to take advantage of it.

To give another example, if you live somewhere up the Wicklow mountains and can only get satellite broadband, is it a breach of competition law that you can't get cable? No, it is not, it is your decision to live there that has caused the problem.

liammur

Godge wrote: »

But if every other bank would charge you as a new customer a much higher rate and seek guarantees because of the risk you carry because of negative equity, then you are getting a good deal with your existing bank! The requirement to have a cheaper rate available to you elsewhere is not a sign of competition. That is why bad drivers get stuck with the same insurance company and people who can't afford to repay loans get stuck with the same bank. It is a function of the mortgage-holders personal circumstances that prevents them getting a cheap loan, not the banks.

I am quite sure that if I was a permanent civil servant with €60,000 in cash saved and no other debt, I could get a good deal on a mortgage from any of the banks and they would be falling over themselves to loan to me. Unfortunately, I am not but the competition is there, it is just some people have put themselves into the position of not being able to take advantage of it.

To give another example, if you live somewhere up the Wicklow mountains and can only get satellite broadband, is it a breach of competition law that you can't get cable? No, it is not, it is your decision to live there that has caused the problem.

It's a little more complicated than that. PTSB has higher rates because they didn't go into NAMA, and therefore to protect shareholder value they increased interest rates over time.

For this reason, they were nationalised, now that the government owns the bank, it wants to take any future profits. So the government wipes out shareholders, and are now reluctant to do what the Troika wanted in the very first place.

LostinKildare

ArmaniJeanss wrote: »

Its an interesting point alright, there are plenty of alternates but none of them actually want your business. So does that make PTSB a racketeer?

I guess if a pub in Dublin charged €10 a pint this would be ok as every other pub is still charging €5. However if you were barred from every other pub then suddenly it seems extortionate.

Yeah, and even then, you could refuse to pay the €10 and forgo your pint. A mortgage holder is legally bound to continue paying her mortgage.

Godge wrote: »

But if every other bank would charge you as a new customer a much higher rate and seek guarantees because of the risk you carry because of negative equity, then you are getting a good deal with your existing bank! The requirement to have a cheaper rate available to you elsewhere is not a sign of competition. That is why bad drivers get stuck with the same insurance company and people who can't afford to repay loans get stuck with the same bank. It is a function of the mortgage-holders personal circumstances that prevents them getting a cheap loan, not the banks.

I am quite sure that if I was a permanent civil servant with €60,000 in cash saved and no other debt, I could get a good deal on a mortgage from any of the banks and they would be falling over themselves to loan to me. Unfortunately, I am not but the competition is there, it is just some people have put themselves into the position of not being able to take advantage of it.

To give another example, if you live somewhere up the Wicklow mountains and can only get satellite broadband, is it a breach of competition law that you can't get cable? No, it is not, it is your decision to live there that has caused the problem.

I think you are missing the point. Yes, of course it is the mortgage holders’ personal circumstances – primarily, negative equity and loss of income -- that are preventing them from being able to move their mortgages to a different bank with lower rates.

They are a captive market. Because of their circumstances, they cannot access more favourable rates (or even less favourable rates, per your bizarre suggestion, since there aren’t any less favourable rates!)

Nor can they simply refuse to pay the high prices and forgo the product or delay their purchase til conditions improve, as can your bad driver, your permanent civil servant with €60,000, and your man in Wicklow.

Their lack of options is not in itself the problem, though.

The problem is how the business to which they are captive –-- in this case, a business owned by the state --- takes advantage of the situation to charge much higher prices because they know that customers have no satisfactory options.

Here again is the quote from the Competition Authority:

a firm is considered to be dominant if it is able to act without taking account of the reaction of its customers or its rivals, e.g. a firm which can increase its prices unilaterally because it knows that its customers have few if any satisfactory alternative sources of supply and therefore little choice but to pay the higher price

Godge

LostinKildare wrote: »

Yeah, and even then, you could refuse to pay the €10 and forgo your pint. A mortgage holder is legally bound to continue paying her mortgage.




I think you are missing the point. Yes, of course it is the mortgage holders’ personal circumstances – primarily, negative equity and loss of income -- that are preventing them from being able to move their mortgages to a different bank with lower rates.

They are a captive market. Because of their circumstances, they cannot access more favourable rates (or even less favourable rates, per your bizarre suggestion, since there aren’t any less favourable rates!)

Nor can they simply refuse to pay the high prices and forgo the product or delay their purchase til conditions improve, as can your bad driver, your permanent civil servant with €60,000, and your man in Wicklow.

Their lack of options is not in itself the problem, though.

The problem is how the business to which they are captive –-- in this case, a business owned by the state --- takes advantage of the situation to charge much higher prices because they know that customers have no satisfactory options.

Here again is the quote from the Competition Authority:

No, I am not missing the point. The bit in bold is the important point. If you make yourself a captive market

- have three car crashes and ten penalty points (captive of an insurance company)
- purchase a house that ends up in negative equity and beyond your means (captive of Permanent TSB)
- over-extend your credit card (become a captive of MBNA)
- decide you only want an exclusive architect to design your house (stuck with his quote)
- only follow one sporting team (have to pay their season ticket prices)

then you make yourself a victim of these companies. Nobody is tying a person with €10,000 credit card debt to MBNA, it is just that nobody else will touch him and why should they? If someone follows Man Utd. and they put up their ticket prices by 10%, there is no obligation to create a second cheaper Man Utd. to keep the punter happy.

Competition Law is designed to deal with a situation where a company or supplier behaves in a certain way. In all of the above it is the behaviour of the consumer that has created the situation. An investigation would look at the mortgage market and say there are lots of providers with lots of different rates, if someone can't move because of something they have done (lost their job, bought in the wrong place, over-stretched themselves) it is not a competition issue.

I am not saying that Permanent TSB are not greedy but I am saying that competition law has no application.

LostinKildare

Godge wrote: »

No, I am not missing the point. The bit in bold is the important point. If you make yourself a captive market

- have three car crashes and ten penalty points (captive of an insurance company)
- purchase a house that ends up in negative equity and beyond your means (captive of Permanent TSB)
- over-extend your credit card (become a captive of MBNA)
- decide you only want an exclusive architect to design your house (stuck with his quote)
- only follow one sporting team (have to pay their season ticket prices)

then you make yourself a victim of these companies. Nobody is tying a person with €10,000 credit card debt to MBNA, it is just that nobody else will touch him and why should they? If someone follows Man Utd. and they put up their ticket prices by 10%, there is no obligation to create a second cheaper Man Utd. to keep the punter happy.

Competition Law is designed to deal with a situation where a company or supplier behaves in a certain way. In all of the above it is the behaviour of the consumer that has created the situation. An investigation would look at the mortgage market and say there are lots of providers with lots of different rates, if someone can't move because of something they have done (lost their job, bought in the wrong place, over-stretched themselves) it is not a competition issue.

I am not saying that Permanent TSB are not greedy but I am saying that competition law has no application.

You do not have to have a car.
A ManUtd fan does not have to buy season tickets.
You do not have to use an exclusive architect.

In each of those cases, the seller can say, "this is the price, take it or leave it."

Fair enough. You can leave it. Refuse to pay; do without or go some place else if you can.

But you cannot refuse to pay a mortgage once it's drawn down, you are legally obliged to pay it. In a normal, functioning competitive market, although you cannot refuse to pay, you can satisfy the mortgage by transferring the mortgage to a competing bank if they will have you; in this dysfunctional market, for the vast majority of consumers buffeted by the crash, that is not possible.

Your view that PTSB mortgage holders have only themselves to blame -- that they've "[made themselves] a victim" of the bank's price gouging by having taken up a mortgage at all -- is strange and also kind of offensive.

And also possibly moot. As far as I can see, competition law doesn't address any potential failings of the consumer -- it certainly doesn't seem to make any judgments about whether the consumer "asked for it"; it is interested in the behavior of the company. However, I'm not a lawyer; I started a thread over in the Legal Discussion forum so maybe we'll get a better informed view.

But on the face of it, the quoted example from the Competition Authority's web site is absolutely fitting: PTSB has increased its prices unilaterally because it knows that its customers have few if any satisfactory alternative sources of supply and therefore little choice but to pay the higher price.

Godge

LostinKildare wrote: »

You do not have to have a car.
A ManUtd fan does not have to buy season tickets.
You do not have to use an exclusive architect.

In each of those cases, the seller can say, "this is the price, take it or leave it."

Fair enough. You can leave it. Refuse to pay; do without or go some place else if you can.

But you cannot refuse to pay a mortgage once it's drawn down, you are legally obliged to pay it. In a normal, functioning competitive market, although you cannot refuse to pay, you can satisfy the mortgage by transferring the mortgage to a competing bank if they will have you; in this dysfunctional market, for the vast majority of consumers buffeted by the crash, that is not possible.

Your view that PTSB mortgage holders have only themselves to blame -- that they've "[made themselves] a victim" of the bank's price gouging by having taken up a mortgage at all -- is strange and also kind of offensive.

And also possibly moot. As far as I can see, competition law doesn't address any potential failings of the consumer -- it certainly doesn't seem to make any judgments about whether the consumer "asked for it"; it is interested in the behavior of the company. However, I'm not a lawyer; I started a thread over in the Legal Discussion forum so maybe we'll get a better informed view.

But on the face of it, the quoted example from the Competition Authority's web site is absolutely fitting: PTSB has increased its prices unilaterally because it knows that its customers have few if any satisfactory alternative sources of supply and therefore little choice but to pay the higher price.

You can default, go bankrupt and move into rental accommodation so there are other options. You can sell, pay back most of the mortgage, move into social housing and pay back the smaller amount of debt over 40 years. See it is only no option if you insist on holding onto the house or the car or the credit card purchase or following Man Utd. It is the inability of most Irish people to treat house purchase like the purchase of anything else that is the problem.

Yes, competition law is about the behaviour of the company, that is the point, but if the company did nothing wrong and the consumer who is the one who left himself in the stupid position of having only one insurance company who will give him a quote, then tough. Ditto for mortgage debt or credit card debt.

LostinKildare

Godge wrote: »

You can default, go bankrupt and move into rental accommodation so there are other options. You can sell, pay back most of the mortgage, move into social housing and pay back the smaller amount of debt over 40 years. See it is only no option if you insist on holding onto the house or the car or the credit card purchase or following Man Utd. It is the inability of most Irish people to treat house purchase like the purchase of anything else that is the problem.

Yes, competition law is about the behaviour of the company, that is the point, but if the company did nothing wrong and the consumer who is the one who left himself in the stupid position of having only one insurance company who will give him a quote, then tough. Ditto for mortgage debt or credit card debt.

So, it's fine for a bank to force its customers to pay silly rates in order to cover its losses on other loans, because the customers have the option of pauperising themselves and their families and becoming dependent on the state, as well as leaving the bank and the taxpayers with wedge of their debt due to bankruptcy.

Oh, and those customers have only themselves blame for the bank's sharp practice, because of their stupidity in ever undertaking a mortgage.

Yeah, okay.

Anybody else have anything reasonable to say?

Godge

LostinKildare wrote: »

So, it's fine for a bank to force its customers to pay silly rates in order to cover its losses on other loans, because the customers have the option of pauperising themselves and their families and becoming dependent on the state, as well as leaving the bank and the taxpayers with wedge of their debt due to bankruptcy.

Oh, and those customers have only themselves blame for the bank's sharp practice, because of their stupidity in ever undertaking a mortgage.

Yeah, okay.

Anybody else have anything reasonable to say?

Wait a minute here, don't lose the plot. I didn't say it was okay, I didn't say it was fine, I just said that it was not an offence under competition law.

You lose the argument so you throw the toys out of the pram and have a rant about a different issue.

Just because the alternatives are unpalatable doesn't mean they don't exist and that will be the important point in any case taken.

jluv

Went to PTSB for mortgage.Looking for €150,000 in 2007. They were practically insisting I take €200,000. They said "finish the garden,buy a car" etc.Thankfully I was too scared to do it.
Started out on fixed rate of2.5% approx.When fixed finished it would have been 4.5% to fix again. Went to bank and they advised me against this as they said it was too high a rate and variable rate would never reach that. Boy do I regret that. 5.7% now.€200 more to pay.As a single income household it's tough. Interesting that someone says you can't go with another bank as was thinking of refinancing..

Sponge Bob

You can go to another bank but it is difficult to remortgage nowadays compare to how it use to be. If your income and job is stable it is worth a try.