Brendan Burgess
Founder
- Messages
- 52,119
And customers will lose out too.
Many of these borrowers would, in time, have recovered completely and would have been able to take out a remortgage to trade up. Some would be on trackers and would be able to move their trackers to a new home.
Those on split mortgages may find Pepper less flexible than ptsb when reviewing the split after three years, despite:
PTSB has received confirmation from Pepper Ireland that post-transfer, when an
arrangement is up for review, Pepper Ireland will engage with customers to review their individual situations, will work with them to understand if their circumstances have changed (i.e. improved or dis-improved) and, where possible, identify the best long term sustainable solution in a way that is right for their situation.
Brendan
ptsb had already made a provision of 30% against these mortgages which seems plenty.
If they had treated them the way the Central Bank wanted them to, they would have had to provide a further €300k or so.
30% may sound like a high provision, but when you look at the underlying assets (the loans) it actually seems light.
Starting with the base value - assuming none of it moves to P&I or early repayment. To get a 4% effective yield on a 20 year zero coupon bond requires a purchase price of 45.6 (so a discount to par of 54.4%). I wouldn't place much value in the option value of the 3 year review trigger/early repayment as these credits are obviously the worst of the bunch as they're not even servicing the interest on the warehoused portion (so they're less credit worthy than the part principal & interest loans). I don't see why Pepper will be any more active or aggressive in managing these credits than PTSB - they will be as aware of the legal hurdles as everyone else.
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?
We use cookies and similar technologies for the following purposes:
Do you accept cookies and these technologies?