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AIB mortgage holders should take advantage of new rules to lower mortgage costs – Doherty

19 February, 2019 - by Pearse Doherty TD

Sinn Féin Finance Spokesperson Pearse Doherty TD has welcomed confirmation in a parliamentary reply that AIB variable customers can now reduce the cost of their mortgage in line with their Loan to Value decreasing.

He said AIB mortgage holders will have received or will soon be receiving letters from the bank which will communicate this new policy. He urged all mortgage holders to read the letter to inform themselves of the new policy and the potential savings.

Deputy Doherty said:

“I am glad to see these practical and concrete moves being made by AIB. This change is a result of pressure from myself and others on the bank to reduce costs for mortgage holders. A combination of new transparency rules from the Central Bank and a policy change from AIB means all mortgage holders should be informed of this possibility.

“Changes to the Consumer Protection Code which came into force in January mean that banks must now explicitly inform consumers that these options are available to them but only if the bank provides the option. If not they must inform customers that other banks may offer better rates.

“AIB through the Minister have informed me that a policy change made in December by AIB and in January by EBS/Haven in January will allow ‘downward loan to value (LTV) band movement’ on the basis of a valuation and a request from the customer.

“What this means is that AIB, EBS and Haven customers should now be able to reduce their mortgage cost as their LTV goes down as long as they provide an up to date valuation. I urge all customers to do so.

“I am disappointed that Permanent TSB are not following suit. Their Managed Variable Rate does allow a reduction however but only once in the lifetime of the mortgage. Nevertheless customers should take advantage with PTSB stating to me that they will pay the cost of a valuation.

“I am querying the position of Bank of Ireland and Ulster Bank with officials from those banks but for me it is clear that lower cost as the LTV reduces should be a right for consumers.”

Note: Please see the PQs in question below

For Written Answer on : 12/02/2019

Question Number(s)157 Question Reference(s): 6446/19
Department: Finance
Asked by: Pearse Doherty T.D.


To ask the Minister for Finance the rights a consumer has to seek a lower interest on their mortgage as their loan to value decreases; the obligations on lenders to inform borrowers of these options; and if he will make a statement on the matter.


The Central Bank of Ireland has made further changes to the Consumer Protection Code 2012 (the Code), effective from 1 January 2019, to help consumers make savings on their mortgage repayments, to provide additional protections to consumers who are eligible to switch, and to facilitate mortgage switching through enhancing the transparency of the mortgage framework. 

For consumers on variable rate mortgages (other than on a tracker rate), provision 6.5(g) of the Code now requires lenders at least annually to, inter alia, notify consumers as to whether they can move to a cheaper interest rate as a result of a move in their Loan-to-Value interest rate band (subject to the provision of an up-to-date valuation and any other requirements that may apply) and, if the consumer is permitted to move between Loan-to-Value interest rate bands, to invite the consumer to contact the lender to discuss the matter further. 

If the consumer is not permitted to move between Loan-to-Value bands, the consumer is nevertheless to be notified that he/she may be able to avail of lower Loan-to-Value interest rate bands from another lender based on an up to-date valuation. 

More generally the Code also requires lenders at least annually to provide variable rate mortgage holders (excluding tracker mortgage borrowers) a summary of other mortgage products offered by the lender that could provide savings for the consumer at that point in time, a statement that consumers should keep their mortgage arrangements under review as there may be other options that could provide savings for the borrower and to provide a link to the relevant section of the Competition and Consumer Protection Commission website ( relating to switching lenders or changing mortgage type. 

For Written Answer on : 12/02/2019
Question Number(s)158 Question Reference(s): 6447/19
Department: Finance
Asked by: Pearse Doherty T.D.


To ask the Minister for Finance the policy of each State-backed bank on changing the interest rate applied to a mortgage loan as the loan to value decreases; when this policy was adopted; if borrowers are entitled to a backdating of this lower rate to the date the lender introduced such a policy; if a valuation of the property is required; and if he will make a statement on the matter.


As the Deputy will be aware, pricing decisions and commercial strategies are the responsibility of the board and management of the banks which must be run on an independent and commercial basis. The banks’ independence is protected by Relationship Frameworks which are legally binding documents which I as Minister, cannot change unilaterally. These frameworks which are publicly available, were insisted upon by the European Commission to protect competition in the Irish market.

That being said officials in my department received the following response from AIB:

"AIB Mortgage customer contracts, since 16/02/09, when LTV mortgages were introduced, state
customers are not permitted to move down LTV bands when the LTV on their property reduces.
The approach in EBS and Haven is the same. Where property prices reduce and LTVs increase,
we do not move customers to a higher LTV band and these circumstances occur usually at a
time customers could least afford a rate increase, such as the period 2007 through to 2012.

"In 2018, as part of an enhancement to our Mortgage Proposition, AIB, including EBS and Haven,
took the decision to change its policy and waive its right not to permit downward LTV band
movement during the mortgage lifecycle. LTV band movement is, however, subject to a
customer providing a supporting up-to-date valuation from a panel valuer and the customer
requesting the change. To be clear, the Bank will not move customers up to a higher LTV band in the event of a fall in house prices."

"Prior to this policy change LTV Band movement was permitted in limited circumstances
for customers with LTV Mortgages. However, it is important to note that AIB mortgage
customers who originated on an SVR Mortgage have always been permitted to move to a LTV
Band, subject to the provision of a supporting valuation from an approved panel valuer, and
they are advised of this capability annually in their mortgage statement."

"The required changes to facilitate the revised policy were put in place in 2018 and it took effect
in AIB on December 17th 2018 and in EBS/Haven on January 1st 2019. All AIB variable rate
customers were advised of the change in their annual mortgage statement sent in January. EBS
variable rate customers will be advised in their annual statements in February with Haven
customers advised in early March. The websites have been updated from the time the change
took effect to alert customers to the change in policy."

"LTV band movement is a customer driven action and supporting information has been provided
to aid customers who are considering whether or not they may be eligible for a lower LTV rate.
The LTV Band change for customers will take effect from the time the up-to-date valuation and
request is received."

Officials in my department received the following response from PTSB:

"In 2015 Permanent TSB changed the default variable interest rate model for mortgages from the traditional Standard Variable Rate (SVR) model to a Managed Variable Rate (MVR) model.  Under the MVR model,  the rate of interest which applies to a variable rate mortgage is linked to the LTV of the mortgage at the time of application.  Mortgages with a lower LTV ratio enjoy lower rates of interest than mortgages with a higher LTV."

"The MVR model is not dynamic in respect of LTVs.  The rate of interest is variable and the LTV is calculated at the time of application only."

"Based on current rates and depending on the LTV of the relevant mortgage, the MVR offers a saving of between 0.20% and 0.80% on the headline rate of interest charged to customers compared to the Standard Variable Rate."

"Existing customers of Permanent TSB are eligible to apply to move to an MVR mortgage.  This allows them to take advantage of any decrease in the LTV of their mortgage since it commenced.  This extends to customers currently on an SVR mortgage, customers who had taken out an MVR prior to 2015 and customers on Fixed Rates subject to the normal terms and conditions that apply."

"Since 2015, Permanent TSB has written to existing eligible customers on a number of occasions to make them aware of the MVR model, to advise them of their options to apply to move to MVR and to explain the steps to be taken to do so.  While a valuation of the property is required, Permanent TSB offers customers a voucher to pay for such a valuation. To date approximately 30% of eligible customers have moved to the MVR model."

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