If you hold a mortgage with either KBC Bank or Ulster Bank, the time has come for you to decide what you wish to happen to your mortgage.
Both of these banks are due to leave the Irish market.
If you take no action and hold a mortgage in either if these two banks, your mortgage will be transferred to either Bank of Ireland or PTSB bank, once ‘due process’ completes and the loan book sales finalises.
Ulster Bank mortgages
Ulster Bank's phased withdrawal from the market is progressing, with legal agreements in place with both AIB and PTSB. AIB is getting the €4.2bn corporate and commercial loan book.
PTSB has signed a deal to get the €7.6bn of Ulster Bank’s mortgages, small business and commercial finance loans.
So, once this deal completes and if you are an existing mortgage holder with Ulster Bank, your mortgage will transfer to PTSB Bank, unless you decide you do not wish this to happen. Ulster Bank will be in contact with you before this happens.
KBC Bank mortgages.
Bank of Ireland has agreed to buy KBC Bank’s performing assets which includes the €8.8bn mortgage book.
Once this transaction completes, and if you hold a KBC Bank mortgage, this mortgage will transfer to Bank of Ireland, unless you take some action to switch your mortgage to another lender. KBC Bank will be in contact with all customers in the meantime.
The Competition and Consumer Protection Commission (CCPC) is investigating both of these transactions from a regulatory and sector impact point of view and its ruling is awaited.
Ireland’s mortgage market is valued in excess of €10bn, but the Central Bank’s restrictive lending rules and the lack of housing supply does curtail the market.
Currently, both the Central Bank of Ireland and the Department of Finance are conducting reviews of the key mortgage polices. The restrictive lending rules, competition and State ownership are all being considered.
Diluting the State ownership stake in the domestic banks could help normalise the sector and create extra funding for the exchequer.
Alternative mortgage options
With Ulster Bank and KBC Bank’s imminent departure from the Irish mortgage market, there is space for new lenders to take a bigger part and offer new options to existing mortgage customers.
Avant Money has just introduced a €1,500 cash offer to entice mortgage ‘switchers’ from Ulster Bank and KBC Bank. This offer is intended to cover any necessary legal fees and, according to Avant Money, "to support Ulster Bank and KBC Bank customers who wish to consider an alternative mortgage provider”.
This is quite a targeted approach by Avant, but does offer an alternative to customers who do not wish to be moved to Bank of Ireland or PTSB Bank. Avant Money is an online offering and does not have a branch network.
Finance Ireland offers residential mortgages through mortgage intermediaries for switchers, as does First Citizen.
Switcher.ie and Bonkers.ie websites provide comparable mortgage interest rates in Ireland, whether a first time buyer, a switcher or re mortgaging.
Should I switch or be switched
If your mortgage is over five years old, you should consider switching it. It can save you a lot of money over the term.
The loan to value ratio (LTV) is very important - the value of the property in comparison to the amount owing (a property worth €300,000 with a loan of €230,000 has a LTV of 77%). The lower the LTV, the better the interest rate.
Anything under 80% LTV is worth asking your current lender for a better interest rate, especially if you are currently on a variable interest rate, which tend to be higher than a fixed rate.
The interest rate is the main consideration when switching. Some lenders offer a reduced or 'green' interest rate based on the BER of the property.
Ulster Bank and KBC Bank mortgage holders need to consider their options before being moved.