But the bank officials themselves justify the high costs of SVR by referring to the loss-making tracker mortgages. In a series of meetings with Noonan this argument appeared time and again.
If one group in society pays at the rate of 4-5% at the time when another pays 0.5-2%, and the assignment into groups was by a lottery for all intents and purposes, what do you do?
Bottom line: The banks do not "vary" their "variable rate" mortgages. I cant speak for other people, but it was my implicit understanding (and as explained by the bank officer at the time) that SVR is supposed to vary, up and down, depending on the costs of funds. If it does not vary over time with the costs of funds, then it is somehow arbitrary. Sure, it is "legal" but it is still a con.
When I got my Irish mortgage in 2007, all banks except Danske Bank had branches in my town. I made a conscious effort to drive to the neighboring town to secure a tracker for myself as opposed to going to one of my local branches for a SVR or Fixed mortgage. I don't remember any lottery draws or flipping any coins to see which product I ended up with.
One of the most famous mortgage-related adverts of the time had a man stand up on a public bus stating "I don't even know what a tracker mortgage is". It's not as if the evidence wasn't out there that they should be researched.
. If the banks charge mortgage-holders a higher interest because some customers default or do not pay or banks sustain other property-related losses, it means that mortgage market pools risks somehow, so even a good customer who never defaults pays more because some in that pool would default, correct? .
Just wish to point out that this has always been the case and will always be. The costs of bad debt/defaulters is built into the cost of the mortgages.
. But I knew that in 2008 rates were so high because they tried to take the heat off the market, and they could only go down later. .
.
Maybe they should increase TRS ad hoc for people like me then, i.e, bought at boom and have non-tracker.
PS Alas, TRS is 15% not 30% until 2017 (look up, this is true). I am obviously grateful to an average taxpayer alongside other TRS recipients but in retrospect i wonder if everybody would have been better off without it from day one, then people taking mortgages would have estimated better what they were to pay as TRS really worked as a subprime teaser rate of sorts.
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