PTSB cuts mortgage rates for the third time this year

May 16, 2024

Having eased considerably last year, fuel forecourt prices are on the rise once again.

In the space of a month average fuel prices have risen by 10-13.5%, according to AA Ireland, in no small part due to the latest phase of the Government’s excise duty restoration.

PTSB has announced cuts to its standard three-year fixed-rate mortgage product for new and existing customers of up to 1.05%.

The bank has also announced a series of reductions across its wider fixed-rate mortgage product offering, over terms from two to seven years.

Today’s rate reductions marks the third and largest set of cuts to fixed-rate mortgages that PTSB has announced since December.

The bank said the latest cuts shows its commitment to providing great value for existing customers, along with strong competition for new customers in the Irish retail banking market.

The new rates will be available from the end of May.

PTSB also said it will reduce its three-year Green fixed rates starting from 3.5% for Loan-to-Value (LTV) of 0-60% for mortgages of €250,000 or higher.

“We are committed to competing strongly in the mortgage market – the combination of these new, lower rates and the quality of our service and our people demonstrate this commitment and our desire to win new business,” Patrick Farrell, PTSB Retail Banking Director, said.

“We are placing a particular focus on cuts to three-year fixed term rates as this term is extremely popular with our customers. As always we will keep our rates under review to ensure we remain competitive,” Mr Farrell added.

Speaking to the media following the bank’s AGM, chief executive Eamonn Crowley said the move to cut rates was not aimed at pre-empting expected rate reductions by the ECB in June.

He said the bank keeps rates under constant review.

“Who knows what the ECB will do,” he added.

Regarding the reduction in the bank’s share of the mortgage market from around 15.4% to13.4% in the first quarter of this year, Mr Crowley said it wasn’t all that long ago that PTSB had just a 2% of the market share.

He said while the bank does not have a target, it thinks it should be moving towards reaching a share of around 18-20% of the mortgage market.

But he also added that the bank is focused on strengthening its share of the business lending and asset finance markets.

He said PTSB’s ambition is to get to a 10% share of new lending in the business market.

Regarding the entry of Bankinter into the Irish market, Mr Crowley said PTSB is already competing with it in the mortgage and personal lending markets, so it is not as if anything has changed significantly.

But he added that he wishes them “the best of luck.”

In relation to the bank’s share price, Mr Crowley said he doesn’t get “too hung up on it”, as it is only one measure of performance and PTSB is a better bank that it was a year and two years ago and the share price was higher then than it is today.

He also pointed to the low levels of liquidity in the stock, which means certain shareholders cant buy shares which he claimed causes the share prices to tick down or up based on low volumes.

Mr Crowley also pointed out that banking stock generally has gone from eight times multiple to five times.

Regarding the bank’s plans for a distribution policy and whether it might lead to a buyback of some of the shares owned by the State, the CEO said the removal of the Central Bank’s dividend blocker “provides us with lots of optionality to think about things like that.”

Chief financial controller, Nicola O’Brien, said the distribution policy will generally cover the ability to carry out share buyback and the parameters for allowing cash dividends.

“So colour for shareholders around what those principles we would actually operate to, to make sure that once we meet those guidelines shareholders have transparency with regards to what we would pay out,” she said.

She added that she was not going to announce details of the policy today, but acknowledged that distributions could be in the range of around 40-60% of profits.

She said a decision on the policy would be in the “near future”.

During the AGM, several shareholders raised questions about how the “odd lot” offer would work.

PTSB’s board sought permission to be able to make an offer over the next 18 months to buy back the holdings of small shareholders with 100 shares or less at a 5% premium.

These are shareholders who may want to dispose of their shares but can’t because of the financial cost involved in the transaction, which would not make it financially worthwhile for them.

But while taxes and duties play a significant role in the price of fuel in Ireland, there are many other factors at play in what we pay at the pump.

Unfortunately none of them look to be moving in the right direction at the moment.

When we’re talking about fuel, the best place to start is with oil prices, isn’t it?

Yes, you’ll often hear business journalists talking about the price of Brent Crude or West Texas Intermediate, which are two classifications of crude oil that are bought and sold on the global market.

They’re priced in dollar and sold by the barrel – and it’s essentially the raw material that our petrol and diesel is made from.

There’s a bit of a lag in the market price for oil and the forecourt price for fuel – because what’s bought today can take a few weeks, or even months, to make its way through the chain until it gets to our road side.

But, until recently at least, what happened on the market was a good indicator of what was coming down the lines.

If you look at the market price over recent years, the price of Brent Crude collapsed back in the first half of 2020, because Covid lockdowns around the world meant there was a slump in demand for fuel.

And that saw the price of petrol and diesel fell here as a result.

But you can see the lag effect at play – because Brent Crude hit its lowest point in early May of 2020 and, according to AA Ireland, petrol here fell to its lowest average price in June, when it averaged €1.21.8 per litre.

Diesel averaged €1.13.9 that month.

You can see it took a few weeks for the ultra low price of crude oil to be passed on to customers.

Article Source: PTSB cuts mortgage rates for the third time this year

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