PTSB passes on mortgage cut
PERMANENT TSB became the latest bank to cut its mortgage interest rates yesterday, bringing good news to homeowners and piling pressure on lenders that haven't reduced their rate after the European Central Bank's (ECB) move on Thursday.
In a statement, the bank said it would slice its standard variable rate by 0.35pc to 4.34pc.
A reduction was expected but PTSB went further than expected taking an additional 10 basis points off its rate on top of the quarter percent the ECB cut its rates.
PTSB will also be cutting its deposit rates in the coming days. The reduction, which will come into effect at the end of this month, will lower repayments by €40 per month for a customer with a 25-year mortgage of €200,000. The rate cut also applies to customers with mortgages on investment properties.
The bank's new chief executive, Jeremy Masding, said the decision "reflected the bank's objective of bringing its variable mortgage rates closer into line with competitors", but warned mortgage rates had to be economically viable to get the business back to profitability.
"We can't divorce our mortgage rates from the cost of our funds and that remains relatively expensive," he said.
The move, which was widely expected, means PTSB no longer has the most expensive standard variable mortgage rate in the Irish market. That dubious honour returns to Ulster Bank, who passed on the rate cut immediately but is still the priciest, at 4.5pc. Allied Irish Banks (AIB) remains the cheapest at 3pc.
Brendan Burgess, of the website askaboutmoney.com, said most of the other banks were likely to follow suit except for AIB, which "probably shouldn't reduce its rate given that it is already at 3pc".
Yesterday, most lenders said they were continuing to review their rates following the ECB's move.
Finance Minster Michael Noonan said the banks needed to make "good commercial decisions", but "they all have directors appointed by Brian Lenihan as public-interest directors and they should have an influence on these matters".
Meanwhile, embattled Ulster Bank has confirmed that some of its customers have seen their salaries credited to their accounts twice while others have had debits such as mortgage and loan repayments taken out more than once as a result of the technology mess that has caused havoc for customers' bank accounts since last month.
The bank said it was fixing the problem and emphasised no customers will be out of pocket as a result of the problems. Accounts are now up to date as at July 3.
Despite the chaos that has enveloped Ulster Bank's IT system, the efforts of frontline staff are ensuring customers haven't left the lender in huge numbers, said industry experts. A leading banking industry consultant said this has a good deal to do with loyalty to staff.
It has also emerged that thousands of insurance policy payments were not processed by Ulster Bank this month to one of the largest insurance companies in the country.
Insurance giant Aviva last night confirmed that it has not received hundreds of thousands worth of insurance payments from customers with Ulster Bank accounts.
"We can confirm that policies across the board have been affected. But customers won't be charged penalties by us," said Shane O'Donoghue of Aviva Healthcare.