HOW CAN I GET BANK TO LOWER RATE EVEN FURTHER?
QOur mortgage interest rate with PTSB was reduced from 4.3% to 3.7%. This was apparently done as our loan-to-value (LTV) rate fell. We still feel this variable rate is too high. I am a pensioner but still working, so switching is not an option. What is the best way to talk to our bank manager to coerce him to change our rate?
AI don’t think coercing bank managers works any more (I’m not sure if it ever did!) as mortgage rates are standardised. This is preferable to the situation that prevailed in the past where people often didn’t know what rate they were supposed to be on.
PTSB also deserves some credit for reducing your rate automatically. With most lenders, borrowers have to keep track of their LTV and ask for a reduction when it hits 80% – and most people don’t do this.
I asked mortgage broker Michael Dowling what rate you should be on. He said: ‘The best rate the PTSB can offer for 50% LTV is 3.7%, so you already have the best PTSB rate for your LTV.’
PTSB is far from the cheapest lender, with KBC and Ulster Bank offering rates of 3.1% for the same LTV rate – but you’re right about switching being problematic. The maximum age at which borrowers can still be paying off their mortgage is 68 with KBC and just 65 with Ulster. You have to have the mortgage paid off by then, so that seems unlikely if you’re a pensioner.
What you could do is pay at least some of your mortgage off early. If you have any savings, they are probably earning way less than 1% interest, so using them to pay off part of your home loan saves 3.7% – over four times more as your rate is so high. Q What do you think of PTSB’s latest offer to repay borrowers 2% of their monthly mortgage – on top of its other cashback deal that gives you back 2% of the loan. What’s the catch?
APTSB does indeed offer to repay 2% of new borrowers’ monthly payments – and also gives them 2% of the total loan as a cashback deal. But beware of innovation in banking – it usually means the lender has cooked up a better deal for itself. Or, in this case, PTSB has cooked up a deal that disguises the true value of its products.
Complications such as this usually serve to confuse the borrower into making a poor decision. I prefer KBC’s marketing strategy on mortgages – like Ryanair, it offers the cheapest rates with few frills. At least then people understand what they are getting. With PTSB, you have to crunch a lot of numbers to find out the true value of your mortgage deal.
Firstly, this offer features a 3.5% variable interest rate, which seems mid-range on the mortgage tables for 80% or less loan-to-value mortgages. The cheapest is KBC’s 3.1% rate. But all is not as it seems – PTSB’s 3.5% rate applies only for one year. After that you go onto a 4% rate, which is pretty dear.
Both the bank’s cashback deals added together are worth around €10,000 on a €300k home loan over 25 years. But the difference in paying back a loan at around 4% with PTSB and 3.1% with KBC would cost you around four times more than the amount you save through both cashback offers!
You’d end up pay tens of thousands more with PTSB. And remember KBC also provides €3k towards legal fees for switchers.
PTSB is a master in the art of confusing borrowers with gimmicks. The undoubted benefits of these – especially in the short term – don’t make up for the fact that it has some of the dearest mortgage rates around over the long run.