PTsb increase rates for the third time in a year

15:48 At 16:00 the press release about PTsb increasing rates will be released.

Had the company waited another week the headline ‘third time in a year’ would not have applied. It was this day last year that PTsb first increased rates on their variable clients by 0.5% or 50 basis points, it was a ground-breaking decision at the time, they were the first institution to do this and it opened the floodgates for every other bank to follow suit. PTsb were not in NAMA and they made their case, but it was rapidly criticised (in particular by Gerry Ryan who very decently gave the affected consumers a platform on his show).

The average mortgage balance in Ireland is €230,000 this time last year when the applicable rate was 2.69% the repayments would have been €1,053 per month on a 25 year mortgage. In the three rate hikes (totalling 1.5%, bringing the standard variable to 4.19%) the repayments will rise to €1,238 which will mean a total of €185 per month or €2,220 per year of additional cost to affected households.

If a person with the average mortgage was on the average industrial wage this has the same net effect as taking a €3,000 pay cut, which has arisen due to mortgage servicing costs.

This move will affect 38% of the banks customers which translates into 80,000 households, which represents a loan book of c. €5.3 billion. The 1.5% increase since last year should yield an additional €80,000,000 to the bank.

The EBS increased rates last week, and another has followed suit within days, showing that once again, banks are taking each others lead when it comes to jacking up the prices that consumers must pay. All of this money will disappear into the financial system and put further deflationary pressures upon the economy. We can expect no reaction from our Regulator and zero protection from further increases by other banks. At least Dick Turpin wore a mask.

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