Permanent TSB accused of exploiting its ‘trapped’ customers by charging them more
PERMANENT TSB chief executive Jeremy Masding has been accused of exploiting existing customers by charging them some of the highest variable and fixed rates in the market.
Meanwhile, new customers can get much lower mortgage rates, the Oireachtas Finance Committee was told.
The committee was told
57,000 variable rate customers are paying 4.5pc.
The best fixed rate the bank offers existing customers is
4.2pc, but new customers can get fixed rates as low as 2.95pc from Permanent TSB. This means that an existing customer on a variable rate is paying €260 a month more than a new customer on the 2.95pc fixed rate for a mortgage of €300,000.
The difference works out at more than €3,000 a year.
Fianna Fáil finance spokesman Michael McGrath told Mr Masding: “You are exploiting people’s inertia and the fact that they are trapped.”
He said many of those paying high fixed or variable rates were unable to move banks.
“It is very discriminatory. You are taking advantage of people who are trapped,” he said.
The committee was told the bank had supplied it with information showing that eight mortgage account holders were paying a fixed rate of 9.1pc.
It is the highest rate in the State and a legacy from a time when the bank had sky-high fixed rates.
Mr Masding said people on the variable rate can apply to get the bank’s lower managed variable rate (MVR), which is based on the value of the property relative to what is owed on the mortgage.
However, the 57,000 customers on variable rates had failed to apply.
The MVR is at least 0.2pc cheaper than the variable rate,
and lower again for those who a lot of equity built up in their home.
Mr Masding defended the bank’s rates, despite the low-interest environment.
He said the credit risk was higher in Ireland, regulatory risks were higher, liquidity costs and capital costs – or the amount of funds banks have to set aside to due to loans not being repaid – are all higher.
But he admitted that the bank’s blended cost of funds is 0.46pc.
Mr Masding said the current fixed interest rate offers for existing customers were being reviewed by the bank.
Jeremy Masding defended his bank’s interest rates