Banks prepare to phase out Tracker Mortgages

[budapest]

This is an interesting development in the mortgage market. Once the preferred option of investors is not likely to exist for much longer:
[broken link removed]

 

[marksa]

Well, it's probably a step backwards in transparency, but given the tone of the article, it probably means that Bank of Ireland are thinking of bumping up their ECB tracker rates soon. I'd be doubtful if AIB would be the "senior" source of this article.

An interesting alternative that retail banks could consider is offering mortgages tied to one month Euribor. Most customers make repayments monthly so this should not create a major issue for customers, while it takes out the basis risk that Banks have in that they cannot fully hedge the difference between ECB and Euribor, the latter being what Banks effectively lend each other money at. The Euribor fixing is calculated daily and is a published rate in the way that ECB repo rate (4%) is. So there remains full transparency.

 

[ccraig]

Would you imagine they will phase out existing tracker mortgages or just new ones? Wasnt quite clear

 

[irishpancake]

Would you imagine they will phase out existing tracker mortgages or just new ones? Wasnt quite clear

see this, from the same article:

Bankers have conceded in private that the contracts they agreed with existing tracker borrowers have turned out to be unsatisfactory, but that there is little lenders can do other than suffer losses on the business.

I know the route I will take if my current provider tries to renege on my contracted tracker rate. Direct to the courts!!

All this begs the question about NIB LTV rates, which are currently ay ECB +0.5% for qualified borrowers, LTV =< 50%.

They(NIB) have never used brokers to sell. Have they been the wise ones??

 

[marksa]

Obviously any phase out would have to be on new deals, Banks would not be able to vary the terms of the existing contracts with their customers unless they bought them out - e.g. offered Standard Variable Rate at similar rate. But I doubt if any Bank would a) offer this option, b) that any customer would accept!

 

[Luckycharm]

Yep was in with my bank yesterday and the rates on the Trackers had gone up quite a bit in the last 3 weeks- thankfully would only affect a top up and not existing mortgage.

 

[irishlinks]

Yep was in with my bank yesterday and the rates on the Trackers had gone up quite a bit in the last 3 weeks- thankfully would only affect a top up and not existing mortgage.

Which bank was that then?