Bank of Ireland to withdraw all ECB tracker products from new customers

The_Conductor

Bank of Ireland (and its subsidiary ICS) have announced they will withdraw all ECB tracker products from new customers from tomorrow (10.10.08).

This leaves AIB and NIB as the only two providors in the Irish market with baserate tracker products.

kmick

Oh well its AIB for the mortgage then...

seamus

Down to the bottom line I guess. Trackers don't allow the bank to just drop the variable rate by 0.1% when the ECB drops it by 0.2%. It also allows then to increase it by 0.2% when the ECB only goes up by 0.1%.

I'm a little surprised at this though - are banks offering long-term trackers? Surely these were just incentives to get the business, like fixed rates?

Fatloss08

im sorry for the language but this really does my head in

banks are w.a.n.k.e.r.s

i pay €1700 a month mortgage on a €305,000 over 35 years thats €714,000 , €409,000 extra i pay

i mean how the fook can they do this , why not have a ceiling that if you borrow €300,000 you pay €450,000 back or if u cant pay ur mortgage just add it to the term

just robbing c.u.n.t's

and now what boi have done is scandalous

ahh the world is ( fooked )

eden_my_ass

smccarrick wrote: »

Bank of Ireland (and its subsidiary ICS) have announced they will withdraw all ECB tracker products from new customers from tomorrow (10.10.08).

This leaves AIB and NIB as the only two providors in the Irish market with baserate tracker products.

Any link to this information? Does it imply that the tracker rate will still be available to existing customers for certain, or is that the next stage?

seamus

Fatloss08 wrote: »

i mean how the fook can they do this , why not have a ceiling that if you borrow €300,000 you pay €450,000 back or if u cant pay ur mortgage just add it to the term

Because that would be socialism. The bank pay a certain amount of interest to borrow money. Therefore you have to pay at least that, plus profit for the bank.

The entire system is based on the accumulation of interest.

You should look at renegotiating your mortgage at least every five years (sooner if circumstances change) with the aim of increasing your payments and lowering your interest rate.

I worked out a spreadsheet at one point (think I've lost it), that took some pretty simple figures, such as a base salary increasing by 2.5% each year, and worked out that on an amount like yours, if you increased your mortgage payments by around 10% every five years, you could drop the mortgage term from 35 to 23 years and save around 250,000 in repayments.

I might do it up again, my memory may be sketchy

ZYX

Fatloss08 wrote: »

im sorry for the language but this really does my head in

banks are w.a.n.k.e.r.s

i pay €1700 a month mortgage on a €305,000 over 35 years thats €714,000 , €409,000 extra i pay

i mean how the fook can they do this , why not have a ceiling that if you borrow €300,000 you pay €450,000 back or if u cant pay ur mortgage just add it to the term

just robbing c.u.n.t's

and now what boi have done is scandalous

ahh the world is ( fooked )

BoI's decision won't affect you unless you were planning to move to one of their trackers. If you were not then don't worry about it.

ZYX

seamus wrote: »

I worked out a spreadsheet at one point (think I've lost it), that took some pretty simple figures, such as a base salary increasing by 2.5% each year, and worked out that on an amount like yours, if you increased your mortgage payments by around 10% every five years, you could drop the mortgage term from 35 to 23 years and save around 250,000 in repayments.

I might do it up again, my memory may be sketchy

You are totally ignoring inflation. Put simply: if your average interest rate over the period of your loan is 5% and inflation averages 6%, then it would cost you money in real terms to pay it off early.Interest rates are coming down at present and will probably drop another 0.5% before Christmas. Paying extra into your mortgage at present makes very little sense.

Moonbeam

I thought EBS were still offering them too?

CiaranC

seamus wrote: »

Because that would be socialism.

Just like the state guaranteeing the banks with public funds then

Its the new economy, socialise the risk and let the bankers get rich. (Please note, this new socialism doesnt apply to regular people.)

blobert

Do EBS not still offer tracker mortgages? I was planning to get one with them...

The_Conductor

blobert wrote: »

Do EBS not still offer tracker mortgages? I was planning to get one with them...

EBS had changed the rules on their tracker products- restricting access to those with >92% LTV, then >85% LTV then >80%

If you check their website its unclear what the current status is (they advise to ring call ebsdirect on 1850 654321)

Ring them and ask......

Trampas

kmick wrote: »

Oh well its AIB for the mortgage then...

AIB stopped offering them today

Thoie

seamus wrote: »

I'm a little surprised at this though - are banks offering long-term trackers? Surely these were just incentives to get the business, like fixed rates?

I signed up for a 25 year tracker mortgage last year, and am clinging on to it by my teeth. I got mine at ECB +0.5x and am doing my damnedest to make sure they never get a reason to take it away from me.

The_Conductor

In all fairness- they really were an Irish "thing". If you look at mortgage lending on the continent- mortgages (annuity or endowment) at fixed rates, are the norm. Banks do not borrow cash at the window, as it were, for the purpose of releasing liquidity for mortgage purposes- its far too expensive for them. The normal path is blocks of loans are securitised and sold as commercial paper- on fixed interest rates, for fixed periods. Most of Europe thought we were off our rockers with our variable rate products and our trackers- and indeed they came back to bite us when the historically low rates rose again to normal levels.

So- who still has baserate tracker products on the Irish market?

SimpleSam06

ZYX wrote: »

You are totally ignoring inflation. Put simply: if your average interest rate over the period of your loan is 5% and inflation averages 6%, then it would cost you money in real terms to pay it off early.Interest rates are coming down at present and will probably drop another 0.5% before Christmas. Paying extra into your mortgage at present makes very little sense.

Eh sorry, can you explain that a bit further. I'm having a little difficulty working out how saving a quarter of a million euros actually costs money.

Ste.phen

SimpleSam06 wrote: »

Eh sorry, can you explain that a bit further. I'm having a little difficulty working out how saving a quarter of a million euros actually costs money.

I think he means that as your salary goes up over time, if inflation is greater than the interest rate on the mortgage, you're better off doing something productive (savings, other investments, buying things) with the new cash, than paying off a mortgage whose outstanding amount, adjusted for inflation, is falling every year regardless of the amount you pay off.
Personally i'd put a premium on being debt-free, and would rather be rid of the dept entirely ASAP but i can sorta see what he means

SimpleSam06

Igy wrote: »

you're better off doing something productive (savings, other investments, buying things) with the new cash, than paying off a mortgage whose outstanding amount, adjusted for inflation, is falling every year regardless of the amount you pay off.

A few points here though, inflation is eating into your salary as well as the mortgage amount (given the current rate of around four and a half percent, you probably aren't making that much over the odds), and unless your other investments are going to turn a quarter of a million euros over the lifetime of the mortgage, it makes considerably more sense to pay it off early. Also you do have to pay off the mortgage one way or the other.

ZYX

SimpleSam06 wrote: »

Eh sorry, can you explain that a bit further. I'm having a little difficulty working out how saving a quarter of a million euros actually costs money.

It is called inflation and it eats away at your money. If you had your €10,000 in a bank and you earned 1% interest a year. After 5 years you would have earned about €500. However with inflation at 5% you would have lost money in real terms. To have the same purchasing power your €10,000 would need to have risen to €12,500. So by leaving your money in a low interest account it has effectively cost you €2,000. It works the same for loan interest. If your interest rate is lower than inflation only an idiot would pay it off early.
Look at it another way. If you are paying say 5% interest on your mortgage. If you pay extra off your mortgage, that means your money is effectively earning you 5%. Also the money is now gone and you cannot use it again unless you apply for a mortgage top-up. However you can put your money in a savings scheme you can earn more than 5% even after DIRT. Also getting your money out is easy and can be used for whatever you like. It makes no sense to pay off mortgage when interest rates are so low.

ZYX

SimpleSam06 wrote: »

A few points here though, inflation is eating into your salary as well as the mortgage amount .

Well normally pay rises are ahead of inflation, certainly over the 25 year period you are talking about here. So inflation is not eating into your salary at all. Also you would expect to be earning more after 23 years than at the start simply through promotion of moving jobs

SimpleSam06

ZYX wrote: »

It works the same for loan interest. If your interest rate is lower than inflation only an idiot would pay it off early.

Yes, because only an idiot would want to save a quarter of a million euros. You seem to have completely missed the point that was made earlier, whatever you were going to be doing with your money probably wasn't going to net you that much. On many levels it makes perfect sense to pay it off as soon as possible. I'm not sure where these great opportunities that your opportunity money will be investing in are.

ZYX wrote: »

Well normally pay rises are ahead of inflation, certainly over the 25 year period you are talking about here. So inflation is not eating into your salary at all.

If inflation is at 0% then it is not eating into your salary. Otherwise, it is. If inflation is at 4% and you get a pay rise of 5%, your effective spending power has increased by a grand total of around 1%.

brazen_dude

Halifax still offers tracker mortgage for first time buyers ... only 90% of the loan is offered though

The_Conductor

brazen_dude wrote: »

Halifax still offers tracker mortgage for first time buyers ... only 90% of the loan is offered though

As of last week- thats 85% with Halifax.

ZYX

SimpleSam06 wrote: »

Yes, because only an idiot would want to save a quarter of a million euros. You seem to have completely missed the point that was made earlier, whatever you were going to be doing with your money probably wasn't going to net you that much. On many levels it makes perfect sense to pay it off as soon as possible.

Even if you assume a quarter of a million (which I definitely would not), it is a quarter of a million in 23 years time. Think how much you would have got with a quarter of a million in 1985 and you will get some idea of how much €250,000 would be worth in 2031

SimpleSam06 wrote: »

I'm not sure where these great opportunities that your opportunity money will be investing in are..

There are banks today, Bank of Ireland or Halifax to name just 2 who are offering rates above 7% on regular savings Anglo Irish is offering 8%

SimpleSam06 wrote: »

If inflation is at 0% then it is not eating into your salary. Otherwise, it is. If inflation is at 4% and you get a pay rise of 5%, your effective spending power has increased by a grand total of around 1%.

Exactly. He has got it!

SimpleSam06

ZYX wrote: »

Even if you assume a quarter of a million (which I definitely would not), it is a quarter of a million in 23 years time.

/facepalm

ZYX wrote: »

Think how much you would have got with a quarter of a million in 1985 and you will get some idea of how much €250,000 would be worth in 2031

Hahahah, ah so by spending the excess salary at the start of your mortgage, someone hand you a cheque for a quarter of a million? No? So the benefits accrue over time in both cases? You don't say...

Actually on a similar point, there are no guarantees you would make even near to that much with your 1% annual gain in spending power, even if you did get that.

ZYX wrote: »

There are banks today, Bank of Ireland or Halifax to name just 2 who are offering rates above 7% on regular savings Anglo Irish is offering 8%

Last time I checked those, those were over the total period of the investment, not annually, and the one that I did find which was annual turned out to be for two years on a maximum of five grand. Is this your magical money engine?

ZYX wrote: »

Exactly. He has got it!

Having a bad day down at the riposte factory I see...

The_Conductor

Moonbeam wrote: »

I thought EBS were still offering them too?

http://www.independent.ie/breaking-news/national-news/business/ebs-stops-offering-tracker-mortgages-1497897.html

Monday October 13 2008

EBS Building Society today announced that it will no longer offer tracker mortgages for new mortgage applicants.

Existing customers with tracker mortgages will not be affected.

Similarly, customers who already have an offer of a tracker mortgage which is not yet drawn down will still be able to avail of the offer within the terms of their loan agreement.

A statement released this afternoon from the EBS said the move is being made as a result of "the continuing high cost of funds in the market".

The_Conductor

Trampas wrote: »

AIB stopped offering them today

http://www.independent.ie/breaking-news/national-news/business/aib-to-no-longer-offer-tracker-mortgages-1495926.html

Friday October 10 2008

AIB has announced that it will no longer offer tracker mortgages.

The bank says the product has been under review for some time because of the continuing high cost of funds in the market.

Existing customers with tracker mortgages are not affected.

The_Conductor

National Irish Bank, a subsidiary of the Dansk Bank Group, are expected to announce imminently that they are withdrawing all tracker mortgage products from new customers. Customers who already hold such products will not be affected. A formal press release will be posted on here later this week.

gurramok

So who is still offering them?

Is it the end of trackers for new business, a historic moment?

jetski

"Bank of Ireland (and its subsidiary ICS) have announced they will withdraw all ECB tracker"

Why would they do that?

The_Conductor

gurramok wrote: »

So who is still offering them?

Is it the end of trackers for new business, a historic moment?

You have a couple of days grace until such time as NIB withdraw their products- all others have now removed them for new customers.