Dan White answers your financial questions
I AM currently on a standard variable mortgage rate of 4.65pc with Permanent TSB. I have been a customer of the bank for the past six years.
I have just read in the Herald of the possibility of Permanent TSB increasing its variable mortgage rate by 0.5pc to 4.75pc, but I am already paying 4.65pc and have been for the past three months.
Could it be possible that Permanent TSB has customers on different variable rates and, if so, have I any rights?
Also, with all the reports that the variable rates are going to increase throughout the year and that fixed rates may not be available to customers, should I move to a fixed rate as quickly as I can and if so which one?
I contacted Permanent TSB and asked them for a list of its current fixed rates for existing customers and this is what they were offering:
- Two-year fixed rate 5.25pc (APR 4.5pc)
- Five-year fixed rate 5.75pc (APR 5pc)
- Seven-year fixed rate 6.10pc (APR 5.5pc)
- Ten-year fixed rate 6.10pc (APR 5.9pc)
If you think I should moved to a fixed, what time frame should I go for?
Any advice on this would be greatly appreciated as I am in the same boat as thousands out there with three young children and only one income.
After checking the Permo website, which only quotes rates for new rather than existing business, the Permo's standard variable rate for new customers is 4.6pc APR, which is almost identical to what Karl is already paying.
However, there is a huge disparity between the fixed rates which the Permo is quoting for new business and the rates which it quoted Karl.
For new business the Permo's two-year fixed rate is supposedly 4.4pc APR.
This compares with the 4.5pc which it quoted Karl. For a five-year fixed rate the Permo is quoting 4.3pc APR vs the 5pc APR which it quoted Karl.
The Permo isn't quoting a seven-year fixed rate for new customers but is quoting 4.6pc APR for a 10-year fixed rate. This is a massive 1.3pc lower than what Karl was quoted.
You don't have to be a genius to work out what's going on here.
The rates being quoted by the Permo for new business are effectively no more than window--dressing.
With most mortgage customers now effectively trapped with their existing lender, the banks and the building societies are squeezing them hard for every last cent.
Yes, some other lenders are quoting much lower fixed-rates than the Permo.
Bank of Ireland is quoting a 3pc APR variable rate for new customers and 3.6pc for new customers, while its five-year fixed rate is 4pc APR for new customers and 4.3pc APR for its existing customers.
Unfortunately for Karl, in the current climate his chances of being able to switch his mortgage are somewhere between none and none at all.
He is now stuck with the Permo for the foreseeable future.
With mortgage rates almost certain to rise even further this year and most lenders likely to scrap fixed-rate mortgages altogether, my advice to him would be to grab either a five- or seven-year fixed rate while he still can.
Renew your VHI policy
In last week’s letter page, I stated that VHI customers had until the end of January, which is this day next week, to renew their policies at current prices before the price increase kicks in.
However, I have been contacted by reader Aaron Clinton who tells me that when his father went to the VHI offices to renew his policy he was told that it must be renewed before January 26, which is this Wednesday.
My thanks to Aaron, and any of you wishing to renew your VHI policy at the old price had better get your skates on.