PTSB is Lender of the Year? It makes zero sense
Can PTSB – the bank with one of the dearest variable rates – really be the best mortgage lender in Ireland?
PTSB was named mortgage Lender of the Year at recent awards held by the Association of Expert Mortgage Advisers (AEMA).
This has raised a few eyebrows in mortgage broker circles.
Surely the price you pay for the loan should be the most important criterion in rating a lender? On this basis, PTSB is very far from the Lender of the Year.
A first-time buyer would pay 3.7% with PTSB in year one.
That’s dear enough compared to the cheapest deal for 90% loans – AIB’s 3.15%. But even then, the rate rises to 4.2% – the second highest on the market – for the remaining term. The difference would tot up to over €33.5k in extra payments to the Lender of The Year with a 25-year loan.
PTSB does offer cashback, 2% monthly cash rebates on mortgage payments, as well as giving a discounted rate in the first year. But these are all essentially gimmicks that can confuse borrowers about the real value of the deal.
The table on the right shows how little it ultimately adds up to over the life of a 25-year loan. Always beware innovation in financial services – it usually means the bank has cooked up a better deal for itself.
A borrower better off with AIB to the tune of €22k over 25 years.
So who exactly are the AEMA and why does PTSB seem to rock their boat (it scooped three awards on the night)?
The AEMA is a representative body of 28 qualified mortgage advisers. Its aim is to promote professional standards within the industry and the development of its members, a spokesman said.
He said the awards recognise the work of mortgage industry professionals and the contribution made by organisations within the sector.
He conceded that AIB and Bank of Ireland are not included in the awards, although AIB-offshoot Haven is. These awards seem industry- rather than consumer-focused.
But PTSB also won an award from Bonkers.ie, a comparison site for consumers.
A spokesman said: ‘The judges at the bonkers.ie awards placed a large emphasis on the ongoing cashback offer from PTSB when making their decision.’
Bonkers said cashback is useful in the early stages of repaying a loan, when borrowers
need to ‘pay for their curtains’.
They can, of course, always take the money and run and change to a cheaper bank later.
However, the biggest chunk of change in the PTSB deal is the 2% monthly repayment, which is spread over the mortgage, just like the €22k benefits of a cheaper lender.
Does PTSB really deserve such kudos if your best bet is to take its gimmicky offer and then do a runner to a better lender as soon as you can?
The Bonkers.ie site is a brilliant comparison tool for household bills and bank products.
I’d have to question its listing of PTSB’s 3.7% rate – the rate for year one – alongside other variable rates. Isn’t the 4.2% rate paid for the rest of the loan the relevant rate?
The Competition and Consumer Protection Commission seems to think so. It lists PTSB’s rate as 4.2% with a footnote to explain you get a 0.5% discount in year one.
If I were dishing out mortgage awards, I’d give one to AIB for offering straightforward value with the lowest mortgage rate around at 2.75% (for 50% loans).
It has also helped to drive our disgracefully high home-loan rates somewhat lower by being the first to cut on a number of occasions, with PTSB not always rushing to follow.
Mortgage broker Michael Dowling, of Dowling Financial, said he would nominate KBC.
‘They have very competitive loan-to-value variable and fixed interest rates, which are available to all customers, new and existing. The 0.2% discount for the term of the mortgage is a compelling sell and the introduction of 10-year fixed rates from 3.05%, 60% loan to value, is what the market needs,’ he said.
PTSB certainly deserves the award for ‘marketeers of the year’ for their range of gimmicks. A spokesman pointed out that PTSB ‘offers very competitive products across all its fixed rates as well as placing a strong emphasis on customer service’.