PTsb have been fairly honest in the way they have handled their loan book over the last two years, unpopular too, however it is important to look at what they are doing, why they did it and what they will do next.

Their first mortgage rate increase came in July 2009 and it was an additional 0.5% on top of the existing variable rate mortgage. The second PTsb rate hike came at the end of January 2010 and was effective from the 1st of February 2010.

PTsb are not part of NAMA, they are benefiting by the guarantee (as are the likes of Postbank) but they are paying for that guarantee – and the only way they can continue operations without requiring an outright bailout is to increase rates, shrink their loan book and reduce costs. In that respect they are to be admired, they are doing what is necessary to remain a going concern.

The trend to watch for however, is that they will continue to increase rates, and their fixed rate offering will remain high, their ideal situation is to ramp up assets and because of that you’ll probably see the conservative rate suite (5 & 10yr fixed rates) on very low LTV’s (<50%) coming in at market leading rates, that is part of the game plan, you can shrink your loan book (ratio’s not absolute terms) by attracting low LTV biz and this is precisely what PTsb plan to do.