Best Deposit Rates: June 2011

If you would like any advice on deposits (apart from rates which we provide below) then you can call us on 016790990. There may be other issues such as wanting to deal with non-Irish banks, or only banks that are covered by the Irish guarantee, we can guide you through.

Best Demand Account: Nationwide UK (Ireland), ‘Easy Access’ 3%

Best 6 month fixed: KBC Fixed Term 1.75% (CAR 3.58%)

Best 1yr fixed: PTsb ‘Interest First’ 3.71%

Best 18mth fixed: EBS Broker 6.5% (CAR 4.29%)

There are other deposit options with longer terms, and also with different choices or durations than our ‘quick list’; but we wanted to cover the most popular ones primarily so if you have further queries then you know what to do!

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Irish banks, caught in the perfect funding storm

Irish banks are caught in a perfect storm of funding costs versus lending costs which spells bad value for consumers. This is clearly seen on the deposit and lending fronts, our banks can’t offer headline rates on deposits, nor can they charge sufficiently on lending. This is creating a multi-billion Euro dilemma which will ultimately be paid for by an already unfairly burdened taxpayer.

On the deposit side foreign banks can afford to pay far more than Irish institutions meaning they can hoover up deposits rapidly and with relative ease, on the lending side, Irish banks are unable to obtain the margin they need in order to compete and remain profitable.

When it comes to leading rates for indigenous lenders you will see that Anglo, despite being nationalised and having the inherent backing of the state on all deposits, is paying the highest rates for an Irish institution on  6 month (it is the best of the Irish institutions) and 1yr deposits (it is the best across the board on 1yr deposits) – this is well above the odds they …

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Why does a state owned bank subsidise depositors?

There is concept in finance of a ‘risk free rate’, and normally that is seen as being the rate of return on money by a sovereign entity (in our case it’s Ireland), so in a rational market it should always be the case that anything with an implicit state guarantee should pay far less than those without it, because those without it have to reward investors by offering more in order to attract them.

Oddly, in Ireland the institutions implicitly backed by the state are actually paying over the odds, and in effect that means a transfer is occurring from tax-payer to depositor, in short, we are being ripped off when our sovereign guarantee is not factored into pricing.

For example: Anglo Irish Bank are paying 3.1% for a demand account, this means you can take your money out whenever you want, BOI, AIB, INBS, NIB and many others are paying a mere 0.1% meaning that Anglo are paying a full 300 basis points or 3% more than competitors who …

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Best deposit rates in the Irish market April 2009

Here is a list of the deposit products in Ireland with the highest interest rates at present.

Demand account: Anglo premium demand 4.75% 7 day notice: Anglo 2% 21 day notice: PTsb 21 day saver 4% 1 month: Investec 3.25% 75 days: PTsb 3.6% 6 month: Investec 4.25% 1 year: Anglo 4.9% 18 month: EBS 6%

If you want to consider your deposit options you can contact us on 01 6790990, although we don’t have deposit agencies with every lender listed in the top position, so in some cases we’ll have to send you direct but in any case we can still help you choose the best deal on the market. All rates are up to date as of 20th of April 09′ and are subject to change.

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Ulsterbank & First Active won't be passing the rate cut

The Ulsterbank Group (which incorporates First Active) have announced they will not be passing on the latest ECB rate cut to their variable rate customers. They did this with savers rather than borrowers in mind. As readers of this blog will know, I am no fan of either of these lenders as they have tended to offer the least value in the market, that, along with their service of the intermediary channel also puts them in the bottom slot as far as the intermediary industry is concerned.

So a move where they ‘don’t pass on the rate cut’ would seem to be the final nail in the coffin right? Well, not exactly. They are doing so to protect depositors, and it is important that people understand why a bank might do this, and why indeed, its is actually the right thing to do in the present market.

In plain English, the answer is this – the lower rates …

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Ulsterbank & First Active won’t be passing the rate cut

The Ulsterbank Group (which incorporates First Active) have announced they will not be passing on the latest ECB rate cut to their variable rate customers. They did this with savers rather than borrowers in mind. As readers of this blog will know, I am no fan of either of these lenders as they have tended to offer the least value in the market, that, along with their service of the intermediary channel also puts them in the bottom slot as far as the intermediary industry is concerned.

So a move where they ‘don’t pass on the rate cut’ would seem to be the final nail in the coffin right? Well, not exactly. They are doing so to protect depositors, and it is important that people understand why a bank might do this, and why indeed, its is actually the right thing to do in the present market.

In plain English, the answer is this – the lower rates …

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GO TO JAIL! Do not pass go, do not collect €200 million

The talk of ‘Economic Treason’ and calling for the heads of every banker are sadly starting to gain more and more traction, all of this is happening without concrete evidence thus far of exactly ‘who’ we are chasing and ‘for what’ specifically, largely the financial leaders greed is central to accusations of wrongdoing, and while greed may not be morally acceptable to right thinking individuals it is not actually a crime.

The FT recently had an article showing that executive pay misguided but that it didn’t make them criminal by nature, stupidity is an ‘equal opportuntities’ trait. It is important that every person in finance is not villified for what was something that all of society played a part in.

One question nobody is asking is ‘what part did I play in this?’, as a brokerage we are culpable, as a consumer I am personally culpable and as a citizen I will be paying for mistakes made on both …

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What next lenders?

Here are some ideas about where we feel banks will go next in terms of the lending market, these are only opinions, whether or not we see any of this coming to fruition can only be told by time.

1. Early Redemption Bonus: Early redemption means ‘paying off your mortgage early’, in fact when you switch your loan this is what happens, or when you clear it entirely. Why would a bank offer you a cash bonus for actually moving your loan away from them though? Or for paying it off? Isn’t the idea that you pay lots of interest?

Actually that’s a mixed answer, normally it would be ‘yes’, banks want you to keep paying interest over time, but now we are seeing a few things that we have not seen before. Firstly are negative margin loans, if you have a tracker of anything less than ECB + 1.5% (ish) then the likelihood is that the bank is not making any money on your loan after their operational cost, therefore it may be worthwhile to give you a monetary …

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