What were people saying about trackers in 2005?

RedOnion

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Brendan Burgess

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I had forgotten that. Well spotted.

David McWilliams used to talk about the tracker mortgage time bomb. When the ECB rates rise, borrowers on cheap trackers are going to be hit very badly. I pointed out that there already was an SVR time bomb.

Brendan
 

Mrs Vimes

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I recall in 2006 my brother asking me to look over his mortgage as he couldn't see how long the tracker was for. He was horrified when I told him it was for the life of the mortgage and not just for the first couple of years like the trackers on offer in the UK at that time (and still, I think) and then reverting to standard variable.

He was working in a bank in a back-office type job at the time and couldn't believe the powers-that-be were stupid enough to link trackers to ECB refi rate when it had so little influence on their cost of funds.

He (and I) definitely saw the value of them then.
 

Stitcher

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I knew the value of them too back in the early 2000s. As far as I was concerned, banks were never going to give you a interest rate below the ECB, or else only for a really short term fix, rolling on to a higher than average SVR which they could change up or down as they so decided. The tracker guaranteed you were not far off the ECB for the life of the mortgage at all times so seemed a good choice, and meant you didn't have to worry too much about having to switch if your bank was not reducing variables or not offering new deals to existing customers. To my knowledge all trackers were for the life of the mortgage when they started. That was the beauty of them. When banks started competing then on trying to have the best tracker rates they went down to very low % above ECB, which were probably unsustainable in the long term (? ) so they were even better value. But then they started to introduce gimmicky discounted trackers and changing terms and conditions without really explaining to customers. Seems it was just too difficult for bankers to offer a fair product without messing with it, just like all the other products like short term fixes, cash back offers. I definitely have no trust in them anymore.
 

Megafan

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I knew the value of them too back in the early 2000s. As far as I was concerned, banks were never going to give you a interest rate below the ECB, or else only for a really short term fix, rolling on to a higher than average SVR which they could change up or down as they so decided. The tracker guaranteed you were not far off the ECB for the life of the mortgage at all times so seemed a good choice, and meant you didn't have to worry too much about having to switch if your bank was not reducing variables or not offering new deals to existing customers. To my knowledge all trackers were for the life of the mortgage when they started. That was the beauty of them. When banks started competing then on trying to have the best tracker rates they went down to very low % above ECB, which were probably unsustainable in the long term (? ) so they were even better value. But then they started to introduce gimmicky discounted trackers and changing terms and conditions without really explaining to customers. Seems it was just too difficult for bankers to offer a fair product without messing with it, just like all the other products like short term fixes, cash back offers. I definitely have no trust in them anymore.
Back then it was a bonus/commission driven culture in banking anything extra they could squeeze out of a customer they would. I worked in the Capital Markets side of AIB (not frontline or markets or anything important) for awhile as an example and there was a lot of rivalry between that side and the Retail banking side, so it was a little bit of a race to the bottom that infected the industry.

In some ways, it might have been a mistake for banks to withdraw trackers fully, rather than keeping trackers and making them completely uncompetitive when things started to face southwards in 2008 for them. They would ultimately have had to take their medicine on the mortgages which had good tracker rates pre crash but because they in effect crystallised the final rate by pulling them from the market, a good number of mortgage holders slipped through the net in terms of compensation (as a potential example any one of the prevailing rate AIB cohort with clause 3.2 with new mortgages post October 2008).
 
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