Has the ptsb put you to the wall with 6.15%

I came off a 4.99% 3-year fixed in May 2010 and luckily the offer contract stated they'd had to offer me a tracker - they chose a crappy ECB + 3.25%, but it's still better than the way their variables have gone.

On another forum (askaboutmoney.com) someone said to me that the PTSB terms with trackers is that "the rate of margin on the tracker can be NO HIGHER DURING THE LIFE OF THE MORTAGE than the margin taken during the original offer". They are saying that this original margin that cannot be exceeded is 4.99% (original fixed rate) less the ECB rate at the time of offer (3.25% in their case) = 1.74%.

So their reckoning is that the max tracker they should be offered is 1.74%.

To me this sounds like creative maths and wouldn't hold water. I don't see any correlation between a fixed offer and what tracker rate you should have later. I'd appreciate any opinion? If that 'magic formula' is true then it would affect a lot of us no doubt.

Hi,
I did not hear about that debate much in media:

http://debates.oireachtas.ie/dail/2012/01/19/00003.asp

Leaders’ Questions
Thursday, 19 January 2012


Dáil Éireann Debate
Vol. 752 No. 2
Unrevised
First Page Previous Page Page of 243 Next Page Last Page

Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív Before the election last year, the Labour Party and the Fine Gael Party made promises to distressed mortgage holders. We have had a number of reports but limited action. The Government also stated after the election that it would act decisively, forcefully and effectively with the banks and others in the interest of those who have difficulty paying their mortgages. We are all aware that the European Central Bank reduced its interest rate in November and December. While some banks took longer than others to do so, most of them reduced the interest rate they are charging mortgage holders. Permanent TSB has 115,000 mortgage holders, approximately 40,000 of whom are on variable mortgages or fixed rate mortgages that will come to an end in the near future. It is charging a rate of 5.19% on a variable mortgage, whereas Allied Irish Banks is charging 3.04%, Bank of Ireland is charging 3.55% and even the rate charged by Ulster Bank, which is not a covered institution, is cheaper at 4.9%. I understand Permanent TSB charges the highest interest rate on a variable mortgage not only in Ireland, but in Europe.

Let us consider the effect this has on people. If a person has a mortgage of €200,000, the interest due on a rate of 5.19% is €200 per week. On an interest rate of 4%, the interest due falls to €154 per week. Charging the AIB rate of 3.04% would reduce the weekly interest to €116. Imagine the difference between €116 per week and €200 per week for a hard pressed mortgage holder. Permanent TSB, one of the covered institutions, is 99% State owned. People are trapped with this mortgage provider because they cannot move to other lenders which will not lend to people in negative equity. It is despicable behaviour on the part of Permanent TSB to charge this rate.

I give credit to the Minister for Finance, Deputy Noonan, for using his powers of persuasion with Allied Irish Banks which reduced its interest rate to 3%. What will the Government do to reduce the Permanent TSB mortgage rate? Imagine the relief it would give a large number of people if the rate could be reduced to the level charged by AIB. The most effective relief one can give to mortgage holders is to reduce their repayments permanently by reducing the interest rate.

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore I thank Deputy Ó Cuív for raising this issue. The Government very much shares the concern he expressed about the difficulties mortgage holders are having, both in respect of the interest rates that are being charged by some institutions and also the difficulties they are having in respect of arrears and the pressure on them, and has acted in this area. Last month, in the budget, it introduced an expanded mortgage interest relief scheme for first-time buyers who purchased their home in the boom years between 2004 and 2008, many of whom are in mortgage arrears at present.

The European Central Bank cut its interest rate by 0.5% in the past two months, which immediately reduced the rates charged on tracker mortgages and some banks have announced that reductions will be passed on to other categories of mortgage holders. The Financial Regulator will engage intensively with the banks to ensure certain mortgage customers are not unfairly discriminated against when savings are being passed on.

The Government is taking urgent action on mortgage arrears. We will propose new schemes for the banks and will immediately introduce pilot schemes in local authorities which will allow people to stay in their own homes, if it is feasible to do so. The focus of the Government is to develop and implement schemes to assist those who cannot afford to pay their mortgages while allowing as many people as possible to remain in their homes. We are progressing personal insolvency legislation, which was one of the recommendations contained in the Keane report. Proposals on personal insolvency which will address the difficulties people are experiencing in repaying mortgages are to be circulated to government in the near future.

In addition, to progress the proposals that were made in the Keane report we have established a steering group, effectively a project team, within the Department of Finance. The group is composed of officials from a number of Departments which have responsibility for dealing with mortgage issues, including the Departments of Social Protection and the Environment, Community and Local Government in respect of the housing side of the local authority areas. We are pursuing a number of options which will provide relief for people with mortgage difficulties, including trade-down mortgages, split mortgages, mortgage-to-rent arrangements and a number of other pilot schemes that are being progressed through the Department of the Environment, Community and Local Government.

I assure the Deputy that the difficulties people are having with mortgages, either in respect of the interest rates being charged or the difficulties they are having in repaying them, are being addressed as a priority by the Government. I would be happy to discuss the detail of the different measures we are taking at any time in the House.

Deputy Éamon Ó Cuív: Information on Éamon Ó Cuív Zoom on Éamon Ó Cuív The Tánaiste mentioned many things I would like to debate with him in detail but I will focus on the proposition that the Government, which is 99% owner of Permanent TSB, ensures its interest rates are no longer sub-prime or usury rates and that they are reduced to the level of the other banks, which is 3% to 3.5%. That would be a huge saving for people. If the Government did that, it might be the resolution to its customers problem and it might not need all of these other rather complicated solutions proposed.

If the Government wants to keep people in their homes, the first thing to do is to ensure the market reacts to what the ECB does. The reason the ECB brought down the interest rate was to make it cheaper to borrow money. What has happened here is that one major lender in the mortgage market has refused to reduce its rate even though it is owned by the Government.

Will the Minister for Finance ensure that Permanent TSB reduces its interest rate from the punitive 5.19% to, for example, the AIB rate of 3%? If he did that, he would ensure huge relief for very many people who find it impossible to pay the €200 per week on €200,000 but who could pay €116 per week. That would resolve their problems. The irony of this is that if the Minister did that, the Government would save money because the interest relief being given is proportionate to the interest being paid. The Government would make a saving by forcing Permanent TSB to reduce the rate.

There are many things I would like to discuss today and the Tánaiste made many interesting debating points but will the Government ensure Permanent TSB brings down the rate as it did with AIB? I compliment the Government on what it did with AIB. It is a job half done but it should finish the job.

The Tánaiste: Information on Eamon Gilmore Zoom on Eamon Gilmore In the earlier part of my response, I was responding to the allegation Deputy Ó Cuív made that the Government was not dealing with the mortgage issue. I believe he is now satisfied that the Government is dealing comprehensively with the mortgage issue in respect of interest rates and mortgage arrears.

In regard to the specific issue he raised, as he is aware, the Government has spoken to, and is in contact with, the financial institutions. There is a role for the Financial Regulator in dealing with the individual institutions in respect of their interest rates. As I said earlier, the Financial Regulator will engage intensively with the financial institutions to ensure certain mortgage customers are not treated in a discriminatory manner and that there is fairness in respect of the levels of interest applied across the board and that the reductions in the interest rate applied by the European Central Bank are passed on to customers. The way in which different institutions do so varies. Some institutions have already passed on some reductions while others have not. It varies from institution to institution but we are anxious to ensure there are not discriminatory practices between one institution and another or between one customer and another. The job of the Financial Regulator is to deal with the institutions in that respect.

I would be happy, as I am sure the Minister for Finance would be, to return to the House at a suitable point to address that again.