PermanentTSB has a lot of residential investment property (r.i.p.) mortgage customers on tracker rates with interest only. In a cynical attempt to remove tracker rates the lender is now contacting every customer who has been with the bank for 5 or more years on interest only and offering a simple choice – give up your tracker rate and pay a higher variable rate, or no more interest only! Such mortgages were taken out on the understanding that the interest only would be for the full term, although the lender had the right to review this. With low rents, increased taxes and massive negative equity on most portfolios, many customers are going to be in trouble within months. And this is even before considering what interest rate rises are coming from Europe. PTSB accepts that customers may not be able to make full repayments, but will automatically take away the tracker rate on the entire mortgage if there is even a slight shortfall on the capital repayment. There was no warning in the original mortgage offers about losing the tracker rate. PTSB also knows that there is no hope of moving to a different lender as most residential investment properties are in serious negative equity and ther are now only 2 other lenders which will even consider low loan to value RIP mortgages . Valuations are down 60% since 2006 , so people in their mid-40’s or older who had 70% loan to value portfolios for their retirement will never even break even. It is disgusting that PTSB is taking advantage of consumers already struggling and adding to their misery. The additional interest charge for these customers is initially 1%, but even that is a temporary discount relative to the full variable rates. Having worked in the mortgage and financial services industry for 20 years, I would be slow to ever recommend PTSB to any of my clients after this. The Financial Regulator prevents mortgage lenders taking away a customer’s tracker mortgage rate, but for some reason this only applies where the property is the consumer’s family home. Whilst this is an important and recent safeguard, it should have been extended to residential investment property mortgage holders.
If you have been or will be affected by PTSB’s latest tactic, please contact me. I would like to help prevent blood in the streets if possible.
The Loan Arranger
Good Financial Housekeeping