Tracker ECB+1%, Bank say they are losing on deal; any chance they buy back mort?

We took out an interest-only tracker mortgage last year at 1% above ECB.

Recent cuts have obviously been greeted warmly.

Our bank mentioned in conversation recently that they are losing money on this deal.

Can anyone say if this is actually true?...and if so.....wait for it....has anyone ever heard of a bank buying back such a mortgage at a small discount?

I know, you gotta think outside the box these days!

Frankie22 said:

Can anyone say if this is actually true?...and if so.....wait for it....has anyone ever heard of a bank buying back such a mortgage at a small discount?

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By this do you mean the opposite of someone on a fixed rate paying to break out of it?

What's in it for you? You're probably not going to get the same rate elsewhere, so for the sake of a quick gain you've probably cost yourself money in the long run. Also they, or any other provider would likely use this opportunity to recalculate your LTV...You could find yourself with no choice on where to go...

Is that 1% rate locked in when you start making capital repayments?

Yes they are loosing money on your mortgage, Euribor rates are over ECB+1%.

Cant see why you would want to "sell the rate" back to the bank, your gain over the life of the mortgage cant be calculated and even if they did want to pay you to get you off the tracker it wouldn't benefit you in the long term.

had a wealth management meeting with boi recently.
am on ecb tracker plus 0.75
said they were losing money on this also
told them i felt a bit teary for them..
they "advised" me to look at fixed rates.
Don't think we are at the bottom of the cycle?
Year end maybe?

Hi All, should have given more detail;
Its a small mortgage, re-negotiated last year.
We have had a small windfall recently and re expecting to to receive some more cash in the near future which together would clear this mortgage. In the current climate we are feeling it may be more prudent to eliminate this monthly cost even though it may not be the most efficient route financially but psychologically it is hard to beat.

I have to admit when I posted this earlier I was expecting responses to tell me I was dreaming but I cant help wondering with deposit rates so low and these unique circumstanced if anyone has ever had any experience or even heard of a bank buying back a punative mortgage at a discount.
Even though its not a lot of money either way, I would relish the thought of playing the banks at their own game and would probably be telling such a story to my grandkids for years to come. What do you think, have I any chance?

OK you've put a completely different slant on that. You want the bank to offer you a reduction on the outstanding mortgage if you agree to pay it off.
While the idea does have merit, the bank may know more than you do.
The euribor rate is over 1% higher now, but it has been much lower before and you could assume it will be lower in the future. So the bank are loosing money on your mortgage now, but that could change in a month, 6 months, a years etc. They are loosing, but maybe very little.
They may still be open to negotiations and there is certainly no harm in trying. If i was you i would put the money into the highest interest earning account i could find, one of those accounts that allow 1/2 withdrawals in the year would be best, at least if something did happen you could withdraw it. If you get an account earning anything over 2.5% then it will be making you more money than if you paid off the mortgage.

Although being mortgage free would be great and that knowledge could be worth far more than any interest made.

markowitzman said:

had a wealth management meeting with boi recently.
am on ecb tracker plus 0.75
said they were losing money on this also
told them i felt a bit teary for them..
they "advised" me to look at fixed rates.
Don't think we are at the bottom of the cycle?
Year end maybe?

Click to expand...

Interesting. Did they imply that they'd make it worth your while?

The best 10 year fixed rate I've seen is 4.65%. I wonder could they offer you say 4% making them a small margin rather then the loss they're making on the tracker?

I've got the same tracker deal and I'm strongly considering fixing for 10 years at some point this year.

As you specifically mention 'small' mortgage plus you have one of the lowest interest rates that exist and you don't need the extra cashflow I'd stay as you are. You also get TRS. So if you can put the windfall in a high interest account you will be gaining more than you would by repaying.

If you have the capital to hand and the bank is willing to sell you your mortgage at mark to market price, then it might be worth considering if you crunch the numbers.

But i doubt they would.

Guys, ypu're both right, I dont hold out much hope & yes, I'd be marginally better off in high interest. I was flirting with fantasy I suppose & wondering if anybody had experience of this. Also, the psychological upside is difficult to put a value upon........thanks once more one & all.