Are we looking at a Mortgage Rates Price War?


#1

irishexaminer.com/breakingne … 06039.html

AIB are dropping all rates by 0.25%

Press release
group.aib.ie/content/dam/aib/gr … market.pdf

I expect many banks to follow


#2

I’m not sure I do expect that.
KBC have been lower for quite a while, and BoI just “tough it out” until they react a little less and their rates are usually considerably higher.

I find it hard to believe that Irish SVRs or Fixed Rates would get much below 3% over next 2 years.
There have been a number of cuts by most banks in last 2 years. I think this potentially might be approaching the end of that cycle?
The EU might start nudging the base rate up in 2018 or 2019?


#3

The headlines are misleading; if you read the press release, it’s actually 0.35% discount for the LTV-based rates that most people presumably actually have. Only reason to be on the old SVR rate (which went down 0.25%) would be if you were in neg equity.

As per the press release, an AIB variable on <50% LTV is now 2.75%. 2.95% for 50-80. Irish mortgage rates are generally far above other European ones, but these (and Ulster Bank’s recent cheap fixed rate) do bring us closer.


#4

So how rigorously are the valuations checked?
I would put an optimistic 250000 valuation on my house.
124000 mortgage outstanding.
Thats >50%
Whats the catch??


#5

AIB generally are reluctant to let people move between LTV bands. If you did move, you’d obviously need a real valuation.


#6

Don’t most banks (if not all) provide an approved list of valuers in order to stop excessively optimistic valuations for LTV purposes?


#7

My valuation four years ago for ulster bank consisted of the estate agent asking how much I was buying the house for. He wrote this on his sheet and went off on his way. Easy money for him.


#8

I switched to AIB last year (good move as it turns out) - I had to get a valuation from an approved agent who came and did a walk around the house.

given that the ECB rate is effectively 0, as banks funding positions improve and they get bad debts off their books (which is happening slowly) you would expect their costs of borrowing to drop which should allow them to drop mortgage rates while maintaining margins. So it doesn’t necessarily mean an ECB rise would automatically be followed by the banks if the market remains competitive.


#9

The valuation is done by an EA approved by the bank but paid for by you.

When we switched ltv bands the guy undervalued it I think deliberately by about 5%.

They rely on repeat business from the bank and therefore err on the cautious side.


#10

To be fair, our house was underpriced. So maybe he was just being conservative. It wasn’t really his business/concern if the property was undervalued I suppose.


#11

KBC have announced a 10 Year fixed for LTV <60% at 2.95% and for a 60%< LTV <80% at 2.99%, both rates including a 0.2% discount for using a KBC Current Account, by way of comparison AIB launched a 7 year fixed at 3.5% as part of their recent announcement and BOI’s existing 10 year fixed rate is 4.2%

Are we slowly moving towards a more European style mortgage market or just a reaction to increasing levels of mortgage switching, hoping to tie customers in with penalty clauses for breaking fixed rate arrangements?

independent.ie/business/pers … 50149.html


#12

at the moment the costs for breaking out of fixed rate mortgages are negligible,

by that i mean if you fixed recently.

a friend of mine broke out of a UB fixed rate of 3% to fix at 2.6% with no penalty


#13

A lot more switching going on with the cash back deals so makes sense to lock them into fixed rates

2.95% 10 year fixed <60% LTV is good, but you need to have current a/c with them, or else you pay 3.15%

I’ve a legacy Ulster Bank Ufirst current a/c for 10euro a month - more than the €4 monthly fee for regular current a/c but I get extra perks like 25% off anything booked with ticketmaster, free phone and travel insurance, discount on mortgage rates, free €500 overdraft. so don’t plan on closing that anytime soon.

Hopefully UB will go with something similar


#14

We’re currently 50%<LTV<80% with AIB which is going to 2.95% on the basis of the latest change but 10 year fixed at the same rate would tempt me to switch.


#15

Was the new rate with UB also?


#16

yes it was :slight_smile:

there is a big thread on AAM about it, he was moaning about having fixed at 3% 3 months previous so i told him to see what the breakage fees were

after much huffing and puffing by UB they informed him that there was none


#17

so what happens if you take up KBC’s 10 year fix offer and your LTV improves over time - are you still stuck on the higher LTV rate? Can’t imagine the breakage fee on a 10 year fix is small.


#18

its not to do with the rate rather there is a fixed formula linked to a banks funding costs,

have a read of this

askaboutmoney.com/threads/i … ly.204442/


#19

Does the mortgage discount apply any more? I recently switched our mortgage to the Loyalty Discounted Variable @ 3.20% which was lower than the uFirst dicscounted rate.

The mobile phone insurance is pointless, the excess would cover the same reconditioned phone on the open market in my experience.

Travel insurance is the most worthwhile perk for us. Ticketmaster discount not so valuable with a growing family.

We don’t use the overdraft, but maybe we should be.
[EDIT]I note that the uFirst portal has been recently revamped. They might be planning on starting it up again?[/EDIT]


#20

I should ask BoI this question but…has anyone who recently-ish got a BoI mortgage - and availed of the 2% cashback offer - asked about switching/re-mortgaging?

We took our mortgage out around two years ago and have been chipping away. At the time we got 5k but there is a clause that says they reserve the right to claw this back if you repay within five years. I’m wondering whether re-mortgaging or switching would constitute paying off the existing mortgage. Technically, I imagine it would - but that would make the ‘break fee’ €5,000.