The state’s competition authority should force Permanent TSB (PTSB) to stop charging different interest rates for new and existing mortgage customers and imposing higher costs on top-up loans, before it agrees. allow the bank’s planned purchase of a large part of Ulster Bank’s loan portfolio, according to a leading consumer advocate.
Brendan Burgess, founder of popular finance website Askaboutmoney, also urged the Competition and Consumer Protection Commission (CCPC) in a submission to protect Ulster Bank’s vulnerable customers as they become ‘prisoners’ from the PTSB, which generally has higher fixed mortgage rates.
“The CCPC should authorize the acquisition, but with conditions,” he said.
Ulster Bank’s parent company, NatWest Group, last month agreed to sell €6.8bn of Irish unit mortgages and business loans to PTSB as it put forward an exit plan of the Republic after years of below normal yields. This would increase the size of the PTSB’s loan portfolio by almost 50%.
The CPCC gave interested parties until January 4 to submit their comments as part of the evaluation of the transaction.
Mr Burgess pointed out in his filing, filed at the deadline, that while Ulster Bank offers the same mortgage rates to new and existing customers, the PTSB uses lower rates to attract new customers.
Ulster Bank’s lowest rate for existing customers is 2.2%, for a two-year fixed term on a mortgage with a loan-to-value (LTV) ratio below 60%. The low of PTSB is 2.95%, for a fixed period of three years on a similar LTV.
Although Ulster Bank’s rate for loan top-ups is at the standard rate for each product, Mr Burgess noted that top-ups at the PTSB are charged at a variable rate of 3.95% regardless of the cost of the loan. main.
Still, the PTSB’s variable rates are lower overall than Ulster Bank’s, according to figures published on the lenders’ websites. Some 35% of PTSB mortgages were fixed rate in June, compared to 20% variable rate. The remaining 45% was made up of tracker mortgages – a product Irish banks stopped offering in 2008.
Change of lender
Mr Burgess estimates that 20% of Ulster Bank mortgage borrowers would not be able to switch lenders, either because they had repayment problems in the past or because of other changes in personal or professional circumstances.
“They risk going from a durable mortgage at Ulster Bank rates to being in arrears at the 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 PTSB spokeswoman declined to comment on the CCPC submissions while the deal is being evaluated.
“Our goal is to create a strong competitive force in the banking industry that provides additional competition for customers,” she said. “We look forward to welcoming Ulster Bank customers to Permanent TSB and can assure these customers that they will be offered competitive products and services, served by a nationwide network of branches and a digital offering of foreground.”
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