I agree wholeheartedly with this option as a 'once-off' option. And like you I think people who signed on the dotted line of a fixed rate ought to have known what they were getting into. BUT the banks, the bankers, the regulators and the developers are all getting off scott free and the tax payers are paying and will continue to pay for their mess so a once off option, to give something back to ordinary householders would be the right thing to do.I usually hold the opinion that if you enter into a contract with your eyes open, you must deal with the consequences if it doesn't go your way.
But on this issue, I feel there is some merit in a proposal for a once-off amnesty where owner-occupier mortgage-holders get a brief "window" of time to break out of a fixed rate entered into prior to October 2008 without penalty.
In Brian Lenihan's Budget speech, he said "The Government has decided that from the 1st of May, Mortgage Interest Relief for principal private residences should only be available for the first seven tax years of the mortgage. I believe this move is justified given the significant recent reduction in interest rates and in house prices."
He is using the rate decreases as a justification for a reduction in TRS, but those on a fixed rate don't benefit from such decreases.
How would fixed rate holders feel if the lenders postponed the fixed rate penalty?
There still will be a penalty to be paid, I'm don't think the banks will agree to a total amnesty.
It just postpones having to pay it until the economy (hopefully) turns.
Say the penalty is €15k, 30 year mortgage. That equates to about €40 per month that the customer would have to put in the savings account until the end of the mortgage.
I usually hold the opinion that if you enter into a contract with your eyes open, you must deal with the consequences if it doesn't go your way.
But on this issue, I feel there is some merit in a proposal for a once-off amnesty where owner-occupier mortgage-holders get a brief "window" of time to break out of a fixed rate entered into prior to October 2008 without penalty.
In Brian Lenihan's Budget speech, he said "The Government has decided that from the 1st of May, Mortgage Interest Relief for principal private residences should only be available for the first seven tax years of the mortgage. I believe this move is justified given the significant recent reduction in interest rates and in house prices."
He is using the rate decreases as a justification for a reduction in TRS, but those on a fixed rate don't benefit from such decreases.
The ECB rate cuts were designed to stimulate the economy, but this aim will be diluted by all those on fixed rates.
As has been said before, these are unprecedented times - perhaps there is scope for one more unprecedented action?
NAMA is going to buy their debts, seize and sell the security for whatever it can get for it, and developers will still owe the balance.
I didn't see any of them living in council housing built by themselves nor down the dole office. Most of them will have ringfenced their PPR etc so they can't really be touched. Ditto for the bankers as they swan off to their yachts in Marbella and their gross pensions.Developers don't appear to be getting away with anything. Most have lost virtually everything.
DerKaiser - policing such a scheme so that only those in difficulty would qualify would be very labour intensive. Opening it to all would get around that - those in difficulty would jump at it. Many of those who aren't might well stick with their fixed rate. Bear in mind that ECB rates will almost certainly go back up - the only question is when. So many will hang on to their fixed rates for safety.
No one will hang on to their existing fixed rate as they could switch to the current fixed rate.
I don't know the figures, but say there's 100,000 people on fixed rate mortgages with an average break out fee of €10,000. That's a €1bn pardon!
I don't think as a society we can in all conscience allow this to happen.
The banks already deal with people in arrears on their mortgages and try reschedule payments. Let them continue to do this, why hand out a free €10,000 gift to everyone on a fixed rate regardless of their personal circumstances?
Would this 1bn pardon as you put it not help to get some liquidity back intot he economy,i think it would!
It would aright.
You could even look at it in terms of giving back a large chunk of the 2% extra health levy imposed in 2 million workers in the budget to the 100,000 fixed rate mortgage holders who are surely more deserving of the money.....
No one will hang on to their existing fixed rate as they could switch to the current fixed rate.
I don't know the figures, but say there's 100,000 people on fixed rate mortgages with an average break out fee of €10,000. That's a €1bn pardon!
I don't think as a society we can in all conscience allow this to happen.
The banks already deal with people in arrears on their mortgages and try reschedule payments. Let them continue to do this, why hand out a free €10,000 gift to everyone on a fixed rate regardless of their personal circumstances?
Good luck in getting out of your fixed rate - I do not wish them on anyone and for myself would have only opted for such an arrangement if I was worried about not being able to absorb significant rate increases (I stress- tested rate change of over 500 basis points as I felt that the rate at the time was extremely low). I have no particular interest in whatever you wish to crow about when you do but if you have sensible suggestions and approaches it may help others who also wish to tackle the cross and bring their costs into line with current variable and tracker rates, I am sure that would be both constructive and welcome.
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