The state competition authority should force the Permanent TSB (PTSB) to stop charging different interest rates for new and existing mortgage customers and to impose higher costs on top-up loans, before d ‘Authorize the bank’s planned purchase of much of Ulster Bank’s loan portfolio, according to a senior consumer advocate.
Brendan Burgess, founder of the popular financial website Askaboutmoney, also urged the Competition and Consumer Protection Commission (CCPC) in a bid to protect Ulster Bank’s vulnerable customers as they become “prisoners” of the PTSB, which generally has higher fixed mortgage rates.
“The CCPC should allow the acquisition to continue, but under certain conditions,” he said.
Ulster Bank’s parent company NatWest Group agreed last month to sell € 6.8 billion in Irish unit mortgages and commercial loans to PTSB, as it put forward an exit plan from the Republic after years of below-average returns. This would increase the size of the PTSB loan portfolio by almost 50 percent.
The CCPC has given interested parties until January 4 to provide comments as it assesses the transaction.
Mr Burgess pointed out in his filing, filed on the deadline date, that while Ulster Bank offers the same mortgage rates to new and existing customers, the PTSB is using lower rates to attract new customers.
Ulster Bank’s lowest rate for existing customers is 2.2 percent, for a fixed two-year term on a mortgage with a loan-to-value ratio (LTV) of less than 60 percent. The low of the PTSB is 2.95%, for a fixed three-year period on a similar LTV.
Although the Ulster Bank rate for loan add-ons is the standard rate for each product, Mr Burgess noted that PTSB add-ons are charged at a variable rate of 3.95% regardless of the cost of the loan. principal loan.
Still, PTSB’s variable rates are generally lower than Ulster Bank’s, according to figures posted on lenders’ websites. Some 35 percent of PTSB’s mortgages were fixed rate in June, compared to 20 percent variable rate. The remaining 45 percent consisted of follow-on mortgages – a product Irish banks stopped offering in 2008.
Mr Burgess estimates that 20 percent of Ulster Bank mortgage borrowers would not be able to switch lenders, either because of repayment problems in the past or because of other changes in their personal or professional circumstances.
“They risk going from a durable mortgage at Ulster Bank rates to arrears at much higher PTSB rates, making them even more prisoners of the PTSB,” he said. “The best way to fully protect these customers is for PTSB to reform its lending practices for all customers and offer these customers the rates offered to new customers. “
A spokesperson for the PTSB declined to comment on the CCPC submissions while the deal is under review.
“Our aim is to create a strong competitive force in the banking industry which strengthens competition for customers,” she said. “We look forward to welcoming Ulster Bank clients to Permanent TSB and can assure these clients that they will be offered competitive products and services, served by a nationwide branch network. and a leading digital offering. ”