PTSB has said it is cutting its fixed-period mortgage rates by as much as 0.95 of a percentage point, setting a market-leading 3 per cent price on one of its products as the bank seeks to continue rebuilding market share.
The new headline 3 per cent rate will be on offer from Friday for a fixed period of four years where the loan is less than 60 per cent of the value of the property, PTSB said in a statement on Wednesday. This marks a reduction of 0.65 of a percentage point.
The bank is reducing rates on mortgages of between two and seven years by 0.15-0.95 of a percentage point.
The bank said that this is the fourth set of reductions it has applied to fixed-rate mortgages since December 2023 and reflects its “commitment to providing strong competition for mortgage customers in the Irish retail banking market”. The European Central Bank has cut its main rates by 1 percentage point since last June.
PTSB’s share of new mortgages slid to 13.4 per cent in the first quarter of last year from 25 per cent for the same period in 2023, as switching activity in the market declined and the bank refused to compete as aggressively as AIB and Bank of Ireland on pricing. The rate reductions since then have seen its market share rise to 16.3 per cent in the third quarter of last year – but it is targeting a slice of 18-20 per cent of the market.
The smallest of the remaining domestic banks in the market is at a competitive disadvantage when it comes to writing new loans.
Every €100 of mortgages the bank issues has a risk weighting of more than 40 per cent, against which it must hold expensive capital. The high risk-weighted assets (RWA) density results from the bank’s experience of the last cycle, when 28 per cent of its mortgages were non-performing. The risk weighing on new Bank of Ireland and AIB mortgages is in the 20s.
PTSB is currently working with regulators on a plan to lower the RWA density on its mortgages.
PTSB has also had to pay up more than its larger rivals to attract deposits in recent times. It had less than €3 billion of surplus deposits parked with the Central Bank of Ireland at the end of June, while Bank of Ireland had €28 billion and AIB had almost €31 billion. The ECB deposit rate is currently 3 per cent, but is expected by economists to be cut by at least a further 1 percentage point this year.
PTSB launched a voluntary redundancy programme late last year in an effort to cut costs, with the Financial Services Union speculating that as many as 500 jobs could be cut as a result.
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