An Ulster Bank customer could end up paying up to €30,000 more in interest to Permanent TSB (PTSB) over the life of their mortgage, according to Brendan Burgess of the Fair Mortgage Rates Campaign.
PTSB on Friday announced plans to acquire €7.6 billion of loans and 25 branches from Ulster Bank as the UK-owned lender withdraws from the Irish market.
The transaction, which is not expected to be legally agreed until the last three months of 2021, will involve PTSB taking over Ulster Bank’s performing non-tracker mortgages and micro-business loans.
Ulster Bank has some of the lowest fixed mortgage rates while PTSB has the highest mortgage rates for existing customers.
Better value
Mr Burgess said customers should switch to a better value lender such as Avant Money or AIB before their mortgage is sold. It is important to note that the savings are based on current fixed rates, which are liable to change.
“A typical customer who does nothing could pay around €30,000 more interest to PTSB than they would have paid to Ulster Bank over the life of the loan,” said Mr Burgess.
“For example, a customer with a €300,000 mortgage with 20 years left would be paying €132 more per month to PTSB than they are paying to Ulster Bank. Over the 20 years, they will pay €102,000 interest to PTSB compared to €71,000 interest to Ulster Bank.
“If a customer has a low balance or only a short term remaining, they should fix for the remaining term with Ulster Bank.
“For example, if they have only five years left on the mortgage or if they are thinking of trading up in five years, it may not be worth switching to a new lender. They should fix for the remaining term of the mortgage to protect themselves from PTSB upping the rate.”
Current rates
This analysis is based on current rates and the situation could change, depending on where interest rates go in the next few years, and the rates might be applied by PTSB.
Mr Burgess noted that customers on trackers do not need to take any action as those loans are not being sold to PTSB.
“Customers in arrears don’t need to panic,” he said. “There are no plans for selling their mortgages at this stage. They should continue to engage with Ulster Bank and try to reach an arrangement.”
