Permanent TSB - Time to Storm the banks ?

[Cliff Barnes]

Mortgage hike shock
Taxpayers hit on double as bank increases rates by 0.5pc from Monday

Friday July 24 2009

HOMEOWNERS are in for a nasty surprise on Monday as the country’s largest lender Permanent TSB increases its standard variable rate for existing customers by 0.5pc.

Other lenders are waiting in the wings to make a similar move as their profit margins are being squeezed amid strong competition for deposits and higher wholesale market funding costs.

Industry observers expect lenders like Bank of Ireland, Allied Irish Banks and EBS Building Society to let Permanent TSB face the political and public anger for being the first to move, before following suit.

The shock move will add more than €70 a month to a typical €300,000 mortgage and wipe out the effect of two rate cuts by the European Central Bank (ECB).

The increase will spark fury among taxpaying homeowners, who have had to bear the burden of bailing out the banking system through the €440bn guarantee scheme and the €11bn cash injection into the country's three biggest lenders.

Taxpayers are also being saddled with the risk of taking over between €80bn and €90bn of risky property loans, through the National Asset Management Agency (NAMA).

The mounting cost of containing the financial and economic crisis has also lumped the public with a spiralling national debt and punishing tax increases and levies.

Permanent TSB's decision to break ranks comes at a time when the ECB has no intention of increasing rates again any time soon.

The bank said last night that its average customer will be hit by a rise of €14.75 to their monthly mortgage. This is based on an average mortgage of €62,500 with 13 years left to run.

The State-guaranteed lenders have generally passed on all 3.25 percentage points of the ECB’s rate cuts since last October – under immense pressure from the Government.

The ECB last hiked rates – by 0.25 points – a year ago, when it was concerned about inflation as oil prices hovered around record highs at over €147 a barrel.

Recession Deflation has become the biggest fear of the Frankfurtbased bank since the financial crisis peaked last autumn – sending the eurozone economy into recession.

The ECB's key rate now stands at 1pc. Foreign-owned banks, which previously had been the most competitively-priced mortgages in the country, have not matched the domestic lenders in slashing the cost of homeloan borrowing in line with ECB moves.

Permanent TSB's standard variable rate (SVR) will increase from 2.69pc to 3.19pc on Monday. By comparison, UK-owned Bank of Scotland (Ireland)'s rate stands at 3.65pc and Ulster Bank's at 4.1pc.

Competition has been slipping out of the market for some time as foreign lenders, which have largely been bailed out by their own governments, come under more pressure to hoard their funds for their home markets.

The trend is expected to be accelerated with Bank of Scotland (Ireland), once the most aggressive player in the homeloans market, expected to announce imminently that it is either shrinking its 44-branch Halifax network or closing it completely.

As reported in the Irish Independent this week, an announcement on the group's sweeping review of its Irish operations has been brought forward from the end of August to quell uncertainty among its 1,700-strong workforce.

A spokesman for Permanent TSB, a unit of Irish Life & Permanent, said it is making the rate move “reluctantly because margins have become extremely tight as the cost of funds have remained high”. Analysts reckon the bank will be loss-making this year.

We the taxpayer are guaranteeing these fuckers very existance and look how they treat us.

Lucky not to have a mortgage with them but this is an affront to us all.

[irishmonkey]

well TSB are fairly exposed as are all banks.
all it takes is the customers to withdraw there money and they go to the wall.
not even the government could save them.
it would keep the other banks in line.
but as always we will bitch and moan and do nothing.

[Cliff Barnes]

Last Updated: Friday, July 24, 2009, 09:27IL&P move to increase rate draws condemnation
DAVID LABANYI, JASON MICHAELThe decision by one of the largest mortgage lenders in the State, Irish Life & Permanent, to increase the interest rate it charges homeowners has drawn condemnation this morning.

Fine Gael leader Enda Kenny said the decision was an "abuse" of the State's bank guarantee, while Siptu is to ask Brian Lenihan to withdraw the guarantee from lenders that increase mortgage rates outside of an European Central Bank (ECB) change.

In adverts in the national media today Permanent TSB said it will increase the standard variable rate it charges by half a percentage point to 3.19 per cent from 2.69 per cent on Monday.

Siptu general president Jack O’Connor said in a statement this morning he would write to the Minister for Finance later today asking for him to “indicate to banks guaranteed by the Irish tax payer that he will withdraw the guarantee from them if they press ahead with increases in interest rates”.

“Apart from the sheer immorality of increasing interest rates it will further exacerbate our overall economic problems, further damaging consumer confidence and reducing consumer demand, thus jeopardising even more jobs in the economy,” he said.

Speaking this morning, the Fine Gael leader said he regarded the interest-rate move as an "abuse" of the guarantee. "Remember, these banks owe their very existence to the Irish taxpayer . . . Brian Lenihan should call in Permanent TSB this morning and demand an explanation as to what this is all about," he said.

Speaking on RTÉ, Mr Kenny questioned whether the Minister for Finance was informed of the step in advance. "You can't have a situation where banks under the guarantee are allowed to expand and extend their profits, and in particular where banks have been recapitalised by the Irish taxpayer and where the Minister has members on their boards."

Mr Kenny, who noted Permanent TSB had not been recapitalised by the State, said he had heard rumours that other institutions could follow with interest-rate rises.

"The Minister for Finance has very extensive powers under the legislation passed by the Dáil, and this morning he should have TSB in before him."

Mr Kenny said there had been too much "lack of accountability" and "lack of acceptance of responsibility" in the banking sector and that he wanted to see Mr Lenihan use the authority given to him by the Dáil. "You can't have a situation where overnight you can have increases like this foisted on already hard-pressed mortgage payers."

The IL&P change could see repayments on a 30-year mortgage for €300,000 rise by about €130 a month.

According to Permanent TSB, the average monthly repayment increase will be just €14.75 as the size of the average affected mortgage is for €62,500, with 13 years remaining.

The change will not apply to holders of a tracker mortgage.

An IL&P spokesman said last night it had passed on all ECB rate reduction – when its competitors had not – and that the high cost of funds.

Very smart marketing bullshit €14 for the average mortgage.

[hemlock666]

So can the government (snigger) refuse to bail them out for raising the rate simply to make more money from their customers? Let me guess this is another flexible arrangement like the one with the church abuse scandal. The taxpayer has to cover the continued existance of a bank that is blatantly ripping off the taxpayers who are trapped in debt, and the government will tell us that its out of their hands as they dont have the liathriodi to tell a bank what to do rather than asking what to do. I urge anyone with them to move banks. Its the only way to stop this kind of thing.

[frankeechops]

Sorry there lad, but if you signed up for a vairiable rate then you have nothing to complain about when the rate is changed. I mean seriously, are you surprised that a bank is still trying to make money? What planet are you on exactly? Would you prefer if they lost money and we, the taxpayer had to pump even more money in?

This is the same as the people complaining about paying too much to get out of a Fixed rate. These same people were rubbing my nose in it when rates were going up(Not to long ago remember?) If you SIGN up to what is probably going to be the biggest loan you ever take out you should read the small print.

Like most thing, Deciding on what type of morgage to take out is a bit of a gamble, Moaning when that gamble does not work out will do you no good.

[quincytwo]

Last Updated: Friday, July 24, 2009, 09:27IL&P move to increase rate draws condemnation
DAVID LABANYI, JASON MICHAELThe decision by one of the largest mortgage lenders in the State, Irish Life & Permanent, to increase the interest rate it charges homeowners has drawn condemnation this morning.

Fine Gael leader Enda Kenny said the decision was an "abuse" of the State's bank guarantee, while Siptu is to ask Brian Lenihan to withdraw the guarantee from lenders that increase mortgage rates outside of an European Central Bank (ECB) change.

In adverts in the national media today Permanent TSB said it will increase the standard variable rate it charges by half a percentage point to 3.19 per cent from 2.69 per cent on Monday.

Siptu general president Jack O’Connor said in a statement this morning he would write to the Minister for Finance later today asking for him to “indicate to banks guaranteed by the Irish tax payer that he will withdraw the guarantee from them if they press ahead with increases in interest rates”.

“Apart from the sheer immorality of increasing interest rates it will further exacerbate our overall economic problems, further damaging consumer confidence and reducing consumer demand, thus jeopardising even more jobs in the economy,” he said.

Speaking this morning, the Fine Gael leader said he regarded the interest-rate move as an "abuse" of the guarantee. "Remember, these banks owe their very existence to the Irish taxpayer . . . Brian Lenihan should call in Permanent TSB this morning and demand an explanation as to what this is all about," he said.

Speaking on RTÉ, Mr Kenny questioned whether the Minister for Finance was informed of the step in advance. "You can't have a situation where banks under the guarantee are allowed to expand and extend their profits, and in particular where banks have been recapitalised by the Irish taxpayer and where the Minister has members on their boards."

Mr Kenny, who noted Permanent TSB had not been recapitalised by the State, said he had heard rumours that other institutions could follow with interest-rate rises.

"The Minister for Finance has very extensive powers under the legislation passed by the Dáil, and this morning he should have TSB in before him."

Mr Kenny said there had been too much "lack of accountability" and "lack of acceptance of responsibility" in the banking sector and that he wanted to see Mr Lenihan use the authority given to him by the Dáil. "You can't have a situation where overnight you can have increases like this foisted on already hard-pressed mortgage payers."

The IL&P change could see repayments on a 30-year mortgage for €300,000 rise by about €130 a month.

According to Permanent TSB, the average monthly repayment increase will be just €14.75 as the size of the average affected mortgage is for €62,500, with 13 years remaining.

The change will not apply to holders of a tracker mortgage.

An IL&P spokesman said last night it had passed on all ECB rate reduction – when its competitors had not – and that the high cost of funds.

Very smart marketing bullshit €14 for the average mortgage.

With politicians, its always " just" and " only".

[markinmanc]

It would appear the govt knew about the rise:

http://www.irishtimes.com/newspaper/breaking/2009/0725/breaking2.htm

Banks and building societies in the UK have been doing the same btw.

[Touchdown]

Yeah, today, I did what I have been preaching, and I dont think I was alone either.
I went into my local TSB (Total Scruge Bastarsds) and closed my accounts with them. I noticed quite a few people there and eavesdropped as much as possible.
To my delight I overheard several customers closing their own accounts too.

I'd say at this rate, there could be a run on TSB funds by the weekend, so get yours now while you can.

Remember what happened at Northern Rock in Dublin last year!!!!!

I have put mine in another Bank, but if they misbehave, Ill take it all to the Credit Union

[Genital Giant]

Power to the People

[leesider]

Interesting story relating to bank bailouts in the US and how it is not trickling down to businesses in need:

http://www.alternet.org/rights/141915/in_illinois%2C_anoth er_workers%27_rebell ion_flares_up_agains t_%27banksters%27_gr eed_/?page=1

[diar2me]

Agreed with the above comment, while it may be a bit premature I think it should come as no surprise to anyone that the banks are trying to get back to profitability and rightly so if I am being truthful. It is good for everyone if they do - Shareholders - Share prices rise, Tax Payer - If money has been put in we can start getting it back and to be honest rates that go up means across the board, people forget that it affects savings etc etc as well! Jesus you can't please people sometimes - people on fixed are complaining at the moment if they can't get off them cause of their rates while those on trackers and variables are suddenly re-joicing, but just wait till interest rates fly through the roof along with inflation in the coming months to year or two, how the tides will turn then. I know everyone is looking for the best deal but sometimes I just wish people were a bit more sensible about it all and realise the banks are out for profits - that's what they do and just look at the long term rather than the short term picture of your mortgage and plan accordingly.