Nope, you'll find they paid 95. If they put in 30% equity, they can currently borrow the balance at negative rates currently. The blended rate is a lot less than 3%, but they'll be making a return of over 10% on the money they put at risk themselves.You will find that Goldman are paying less than 95c for the book. On a blended rate the book is probably yielding a 3% cash yield (blended SVR / tracker rates). So they buy for say 85, then this yield increases to 3.5%. They put in 30% equity (IRR c. 12%) and borrow the balance at say 3% so their levered IRR is c. 6.7%. So they need to make this return every year on the book. If you discount that over the medium term, there is no economic basis for paying 95c.
Anyone else out there stuck in the Tracker review with the CBI. I am (tracker to fixed to SVR) and Danske have told me to run and jump. CBI still reviewing. Just interested to hear different perspectives and approaches. Other banks (definitely PTSB) have restored trackers in identical circumstances.
Tks.....
If you happened to be massively in arrears, maybe you could negotiate, but they have no reason to offer a discount on a performing Mortgage, tracker or otherwise.So consensus is there is likely to be no discounts available to customers if they were to offer to pay off their remaining balances?
That's what Dilosk initially did when they bought the ICS portfolio, because they had no other way to fund it.RedOnion, they borrow the money in what is called "loan on loan" finance. You get a loan to pay for a loan book. That's how the loan sale market works. Maximum leverage of up to 70% and for a redo mortgage book as collateral, pricing at 3-4%.
....they'll be making a return of over 10% on the money they put at risk themselves.
I don't dispute your logic at all, but I was surprised to see you didn't give mention to the cost of managing the portfolio. Pepper won't be in this for nothing as we all know and even if they have agreed some sort of arrangement where they share in any upside, they'll still want ongoing fees.
I'm still surprised that the funds in question would be interested in this deal at 10% or thereabouts, I'd have expected them to be looking for mid teens in terms of their return, but perhaps 10%-ish is all they can get in the market at the moment and they have plenty of money available to invest.
This sale might be good news for people in your position. The loan sale deed would have included a disclosure about tracker issues, and which party is liable for any costs of redress.Fair enough RedOnion....makes sense and you obviously know your stuff!
Anyone else in the same boat as me though?
Got a letter today from Danske headed: IMPORTANT INFORMATION REGARDING THE SALE OF YOUR ACCOUNT(S). No mention in the rest of the letter about the account being sold (or not) just a statement to say 'All obligations remain due and owing to Danske Bank' and information regarding new contact details for Pepper. Typical Danske.
Got a letter today from Pepper, advising about changes on how they apply the TRS.
Going forward, they will offset the TRS against monthly mortgage repayments, rather than pay it to us separately after we make our mortgage repayment. I'm good with that. However, as part of a system change, they won't be giving any credit for the March 2018 TRS payment, until December 2018 (seems odd that they need nine months to put this right ?).
Slightly confusing alright but does it make any material difference as there won't be a month without TRS being refunded or applied?
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