PTSB offers lower rates to 70,000 mortgage holders

Permanent TSB has written to about 70,000 residential mortgage customers offering them discounts of up to 0.8 per cent on their standard variable rates (SVRs) if they apply to switch to a new product based around loan-to-value ratios.

This initiative comes in advance of the bank meeting with the Minister for Finance Michael Noonan to discuss its initiatives to reduce its standard variable rate.

The Minister is meeting with all mortgage lenders this week and next for an update on their plans to meet the Government's call for a reduction in SVRs to reflect the near zero interest rates being applied in the euro zone by the European Central Bank.

Loan-to-value

PTSB, which is 75 per cent owned by the State, began writing to customers last week, offering them the opportunity to switch to its so-called managed variable rate (MVR), which is connected to the loan-to-value ratio on a mortgage.

Depending on a customer’s LTV, the discount applied on their interest rate will range from 0.2 per cent up to 0.8 per cent. This is part of an initiative by the bank to eliminate SVRs.

PTSB has one of the highest SVRs in the market at 4.5 per cent.

MVR mortgages offer a lower rate of interest to customers whose mortgage borrowings represent a smaller percentage of the value of the property.

AIB, which is 99.8 per cent owned by the State, met the Minister on Monday. Its chief executive Bernard Byrne noted that the bank had cut its SVR rates three times in the past ten months, benefitting 156,000 mortgage account holders.

He told Mr Noonan that the level of mortgage drawdowns has increased significantly this year with its market share rising to 36.3 per cent from 32.8 per cent in 2014.

AIB announced a 0.25 per cent rate cut in August that will take effect on October 1st.

The new SVR for AIB will now be 3.65 per cent, and 3.70 per cent for its subsidiary EBS and 3.72 per cent for Haven.

Fix-rates

Bank of Ireland

and KBC are due to meet the Minister tomorrow.

It is understood that Bank of Ireland will reiterate that its focus is on encouraging customers to avail of fixed-rate mortgages.

The bank is also offering unlimited 2 per cent cash back on any mortgages drawn down between June 3rd and the end of this year. This is available to first-time buyers, movers, switchers and investors. It offers €2,000 to customers for every €100,000 drawn down in a mortgage.

Ulster Bank is due to meet the Minister next week and is expected to focus on the fact that all of its new fixed rates are available to existing as well as first-time buyers.

Ulster Bank last week announced that it was cutting its variable rate by 0.3 per cent to 3.5 per cent for existing customers whose mortgage is 60 per cent or less than the value of the home.

It will also offer a 3.2 per cent three-year fixed rate product, subject to certain conditions.

Banks are also being asked to update the Minister on their mortgage arrears positions.