Tracker pulled before Mortgage drawdown back in '09

[gnf_ireland]

I don't think banks contact customers when loan offers are about to expire, I never recall doing that, feel that's up to customer and solicitor to get their act together to draw down in time.

My original mortgage offer from 2010 (was a house purchase + renovations so level of phased payment) clearly states the offer was valid for 4 months only. Granted this was a different bank, but only 12 months after the OP mortgage discussion

You say, as someone who worked in a bank, that no one knew how good a Tracker was. I did, as I am sure many others did too.

I think this statement may be poorly phased to be honest. You had more comfort in the fact the rate was being tracked against something external. The ECB rate was likely to have no bearing on Ireland and would be driven by the economic powerhouses of France/Germany. However, around this time the ECB rate was rising and it peaked at 5.25% for a period. Add 1.2% onto this, and you would have a rate of 6.45% on an ECB tracker. There is no way that anyway, even the bravest economists, could have predicted that the ECB would engage in such a long and persistent QE programme in 2009 and leave ECB as close to 0 as possible for an extended period. These are extraordinary times, and this is what has made the tracker product so valuable - but that is only with the benefit of hindsight.

If I was offered a 2.5% ECB tracker today or a 2.95% fixed for 10 years, being honest I would pick the 2.95% fixed. Why - in all probability, the ECB rate is likely to increase within the next 10 years. 2.95% gives be certainty and this has a premium associated to it. The only other time in my mortgage I fixed was for the first 2 years between 2011-2013 as there was a huge level of rate uncertainty and again it was the best option.

 

[gnf_ireland]

Tracker mortgage s however were different in that the ECB underpins all loans, at least that is what I understood. I know banks change rates regularly but on principal, I reconed they were good value. Fixeds were always a gamble I thought as you never can tell what is going to happen.

The benefit of a tracker and longer term fixed rate product in my view is you can clearly compare products across all banks, not just at a point in time when the loan offer was made.
It has always frustrated me that I cannot compare mortgages beyond this single point in time. A tracker against anything external to a bank - EUIBOUR, ECB, Average Cost of Funds, Average Mortgage Rates etc allows me to clearly compare the offers not only today but over the lifetime of the mortgage.

The Tracker I always thought was honest and fair, and a low rate Tracker was as good as it gets.

Low Tracker is good where the ECB interests are aligned to the local interests. If Irish interests differed greatly from European ones - say for example if inflation was rising quickly in Germany and they needed to rise the ECB rate while the Irish economy was still on its knees, the tracker is not as solid a product.

Put another way, if the financial crises was a local one alone, rather than a wider financial mess, the value of the trackers would not be making headlines and very few people would be fighting to have then reinstated, as its likely the ECB rate would be floating around 4%.

 

[Stitcher]

gnf, thanks for the comments. I agree that a low rate fixed for 10 years would be beneficial, and certainly worth thinking about. I would not consider a Tracker of +2.5% to be attractive but A Tracker of 1% is.
My contribution to the discussion was not really addressing the thread topic, apologies all, so I will leave others to help the original poster, Calibos.

 

[Calibos]

OP here. Thanks for everyones contribution. Sorry to possibly have wasted your time. Finally got to look at the Loan approval documents myself the other day. Parents were correct in that there was no expiry dates or periods mentioned in the documents. Unfortunately, they failed to correctly interpret the very first paragraph of the Tracker Rate Explanation, which to my mind is the EBS's get out clause. Words to the effect of, "the rate will be that in effect at time of Cheque drawdown and if the bank no longer provides a tracker product at that time, then the standard variable rate will apply..."

Googled just there, and there was an article in the Independent from October 2008 saying that EBS were stopping offering Trackers to new customers.

Our first Approval documents were from August 2008 for a Tracker so before the EBS Tracker Cessation and we have several amended approvals which still include the Tracker up to the final one we signed in April 2009 which is after the date EBS supposedly stopped doing trackers.

Why didn't they pull our tracker then in April. Why did they wait till we had demolished the House in Nov/Dec?

 

[Monbretia]

There may have been a cut off for drawing down existing loan offers which might not have passed when you got the last loan offer, either that or they just kept updating and reissuing the old loan offer without amending them as the rate applicable was only going to be relevant at drawdown anyway.

 

[Calibos]

I’m about to post a thread in Vulture funds asking if Mars might be amenable to a discounted final payment to clear that €90,000 outstanding balance. ie. My 76 yo dad can only afford to continue to pay €1000 a month until its cleared (even without interest it’d take 7.5 years and he’d be 83yo, but one of my brothers can loan him 50 grand from house deposit savings for a few years and dad can pay the brother back 1000 a month. When I clear some loans in 2 years I can borrow 15 or 20 grand and pay the brother back that amount meaning he’ll have his 50 grand back in 2.5-3 years about when he’ll need it. I can afford to wait for my money back come inheritance time. Question is will Mars laugh at dad if he offers them 50 grand in full and final payment? Time will tell!

 

[Brendan Burgess]

I suggest you start a new thread in the arrears section giving the full details.

But as a general answer, they won't give a write down unless it's deep negative equity and deep arrears.

Brendan