More fixed rate mortgages disappearing

Our prediction that fixed rates would cease to exist this year is proving quite accurate, at the time we took quite a beating for making such a ‘drastic’ call in our Mortgage Market Trend Outlook report.

So far, PTsb have removed them and now Haven (and likely EBS) are set to do the same. We received notice today (see below)

The concern from a borrowers perspective is that we are getting to a point where you can’t fix a mortgage and you will be forced to ride the rate hikes that banks come up with including any that come from the ECB.

HAVEN FIXED RATE UPDATE

Due to ongoing increases in the cost of funds we will be temporarily withdrawing both new and existing business mortgage fixed rates. Significant movements on financial markets have resulted in fixed rates which would not deliver value to customers at this time.  This position will, of course, remain under constant review.

PIPELINE IMPLICATIONS

New business loan offers will be honoured until close of business Monday …

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Sunday Time: OpEd on Mutual Building Societies

The Sunday Times ‘Money’ section ran an opinion piece by Irish Mortgage Brokers on Mutual Building Societies in which we lamented the end of an era but made the point that the benefits of mutuality no longer exist given the market we are in.

Mutual building societies have an interesting history but their purpose was ultimately financial intermediation which is what banks nowadays perform, that, along with pricing and the test of the market have shown that Mutuals no longer have a place in the market on the basis of their structure, rather the market requires firms that exist on the basis of competition just like anybody else.

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Why bid for EBS?

Along with many others, I was confused at the fascination with EBS as a takeover target. You see, EBS’s best year recorded a profit of less than €50 million. Which given the size of its operation and loan book is rather unimpressive. The company is also heavily staffed by union members meaning it would be difficult for present management to wade in and cut the numbers in a meaningful manner.

So what is the obsession with private equity and EBS? And what about PTsb?

For a start, PTsb are not currently my lead favourite as a bidder, there are two reasons, one is that the bank rescue plans are being looked at from a competition aspect in Europe, and if PTsb were to take over EBS it would reduce competitive forces, secondly, PTsb may not be in condition to do a takeover. They have their stress-test due out in September and for now we have no idea of how that will look, EBS would add a large chunk to their loan book but deposits in the society are only c. …

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Haven move LTV’s lower

The EBS distribute through brokers via their subsidiary ‘Haven Mortgages’, the EBS have thoroughly debunked the idea that mutuality means anything by charging their existing clients different rates than new clients. They have also failed to be in the driving seat for a ‘third force’, going it alone has not happened, remaining an independent entity has failed, and the likelihood of private equity getting involved will most likely hinge upon state support being part of the package, thus it seems that institutional buyers will be the only serious suitors.

It is in an environment such as this that costs should be most seriously addressed, they have done this with Haven, slashing commissions and workforce, getting the organisation lean, but thus far EBS have failed to pursue efficiency with the same zeal within their own camp, and this zombie-like bank/mutual/whatever, is now reducing LTV’s for the only efficient part of the operation, Haven will now only offer a maximum of 80% LTV to potential clients, leaving 90% loans with the least effective arm of the organisation, the agent network.

It is …

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