Tracker Mortgages

handlemaster

Theres was an article in the irish independent last year regarding banks possibly going to offer customers reductions on the capital borrowed if they moved off trackers. Just some was saying to me today customers have been called by banks doing this !!! Has any one had experience of this ?http://www.independent.ie/business/personal-finance/property-mortgages/borrowers-warned-to-reject-836415000-offer-to-quit-trackers-2163168.html

harr

handlemaster wrote: »

Theres was an article in the irish independent last year regarding banks possibly going to offer customers reductions on the capital borrowed if they moved off trackers. Just some was saying to me today customers have been called by banks doing this !!! Has any one had experience of this ?http://www.independent.ie/business/personal-finance/property-mortgages/borrowers-warned-to-reject-836415000-offer-to-quit-trackers-2163168.html

i have a tracker and my bank rang me in January and made me an offer of 10,000 to switch to a variable rate, as i still have 180,000 left on my mortgage i declined the offer and then just last week they offered me 16,000 and i again declined the offer.:eek:

handlemaster

harr wrote: »

i have a tracker and my bank rang me in January and made me an offer of 10,000 to switch to a variable rate, as i still have 180,000 left on my mortgage i declined the offer and then just last week they offered me 16,000 and i again declined the offer.:eek:

thats interesting .. do you mind saying which bank ?

harr

handlemaster wrote: »

thats interesting .. do you mind saying which bank ?

rather not say,pm sent

tdo

Overall this is an interesting concept. Read an article recently making the observation that it this might be a solution to negative equity; to wit: rather than sticking to a tracker, the banks offer to buy you out of the tracker and move you to variable. The banks will have probably taken a loss provision on these loans anyway, so it won't further affect their bottom line. For the house owner, it could very well bring them back into positive equity.

The key here is that the buy out has to be credible, and should be that amount of money that gives the same total present value of mortgage payments at a tracker versus a variable. Though as an enticement, personally I'd only go for a new tracker and not a variable...who'se to say they wouldn't shaft you post switch?

Just guessing, but in most cases we're not talking €15k here, or anything close to it - context A 3% int rate differential and no change in principal is an extra €120k of interest on my mortgage. I'm sure someone with more time could work up the calculation in excel pretty quickly.

handlemaster

harr wrote: »

i have a tracker and my bank rang me in January and made me an offer of 10,000 to switch to a variable rate, as i still have 180,000 left on my mortgage i declined the offer and then just last week they offered me 16,000 and i again declined the offer.:eek:

Its my understanding any payment from the bank regarding mortgage reduction would be taxed as capital gains. currently 25%

dotsman

handlemaster wrote: »

Its my understanding any payment from the bank regarding mortgage reduction would be taxed as capital gains. currently 25%

How so? Is it not simply debt restructuring?

Thoie

tdo wrote: »

The key here is that the buy out has to be credible, and should be that amount of money that gives the same total present value of mortgage payments at a tracker versus a variable. Though as an enticement, personally I'd only go for a new tracker and not a variable...who'se to say they wouldn't shaft you post switch?

Just guessing, but in most cases we're not talking €15k here, or anything close to it - context A 3% int rate differential and no change in principal is an extra €120k of interest on my mortgage. I'm sure someone with more time could work up the calculation in excel pretty quickly.

From an earlier thread:
http://www.boards.ie/vbulletin/showthread.php?p=65842717#post65842717

Edit (hit send too soon)
I had previously worked out that the banks would want to offer me 50-75% of my current mortgage value to make me consider moving off the tracker.

Eire Go Brach

harr wrote: »

rather not say,pm sent

Just name and shame the ****ers.
I heard they should offer you at least a third before you should even think about it.

tatapeg

I am in the fortunate position of offering the bank to fully repay my tracker mortgage (small mortgage) and have asked them if they can give me a discount - they have said no! I can't understand this as they have to be losing on any trackers but perhaps they do not want to set a precedent - I had heard that some banks were offering discounts but perhaps this is just if the debt is restructured. Any views?

Thoie

tatapeg wrote: »

I am in the fortunate position of offering the bank to fully repay my tracker mortgage (small mortgage) and have asked them if they can give me a discount - they have said no! I can't understand this as they have to be losing on any trackers but perhaps they do not want to set a precedent - I had heard that some banks were offering discounts but perhaps this is just if the debt is restructured. Any views?

Out of contrariness, (and depending what your current tracker rate is), I'd be inclined to say "Right so" and put the majority of lump sum into a high interest 12 month account, while paying off a bit more on the mortgage each month.

However if (when) the ECB rises by 0.25% in the next 12 months, you could lose out if the new rate is higher than the deposit interest. Your cards are already on the table, so the bank has no reason to give you an incentive to come off the tracker.

homer911

As the ECB rate rises, Tracker mortgages will become less loss making for the banks and should eventually return to profitability for them - at least in the future, they are unlikely to make enough to cover past losses unless you let the mortgage run for quite a few years..

The problem at the moment is that they can't borrow money at ECB base rates

Diddler1977

tatapeg wrote: »

I am in the fortunate position of offering the bank to fully repay my tracker mortgage (small mortgage) and have asked them if they can give me a discount - they have said no! I can't understand this as they have to be losing on any trackers but perhaps they do not want to set a precedent - I had heard that some banks were offering discounts but perhaps this is just if the debt is restructured. Any views?

Same position. Asked the same question of my bank and they refused also.

PC_DAVE

I did exactly the same thing only last week. Offered to pay off the mortgage at a discount and they refused. We have a tracker mortgage which is .75% over ECB. I believe, and correct me if I am wrong, but the highest the ECB was at, even during the worst times of the 80s etc was roughly 5.5-6.0%? so the most we'll pay is 6.75%. In 1996 people paid between 7 and 10% for fixed rate mortgages. Irish banks can't borrow at ECB rates at the moment so surely getting say €100k from a customer that they were receiveing 1.75% on and loaning it out to another mortgage applicant at 4.5% is a winning prospect for the bank no matter what way you twist it.

tatapeg

Yes I agree with you Dave. My loan exactly the same - currently paying ECB 1% plus margin of 0.75% My first mortgage in 1983 was fixed at 12% ! The banks have to increase their loan to deposit ratio (LTD) so paying back a loan currently on 1.75% at a discount can only make sense - I have heard from a reliable source that Bank of Scotland (who have now pulled out of Ireland) are doing this through their admin entity Certus. With ECB rate increases on the horizon there are going to be more and more mortgage holders defaulting on their debt - I feel the banks are just deferring the problem. What I had hoped to do was get a face to face meeting with the bank but this can be very difficult - i.e. getting to the decision maker in the bank - at branch level all they do is pass requests on to corporate HQ - they are just a conduit. Watch this space - I have not given up!

PC_DAVE

Hey tatpeg,I would be very interested in what you find out here as we are indeed with Ulster Bank(parent Royal Bank Of Scotland) and as you say our inquiry was passed to the local branch who in turn passed it onto HQ(somewhere in the sky :-) ). Apparently HQ came back with the refusal. My problem was trying to get in contact with the decision maker directly, nothing can be decided at local level. I'm not overly disappointed,I won't make the same offer again, if they approach me in the future to make such a deal I will be deducting the monthly payments since this offer from the next. Mortgages are for the long haul,it would have been nice to have unloaded it early however

tatapeg

Hey Dave - as far as I understand Ulster Bank are different - Royal Bank of Scotland (RBS) is different entity to BOS plc - BOS plc is now managing the portfolio previously held by Bank of Scotland Ireland since they pulled out of the Irish market in December 2010. Yes my point also is that I may not be in a position say this time next year to make offer to the bank and I could indeed run into difficulties if for example I lost my job and I would go into default on my loans. Will post any progress I make- regards

tatapeg

I have had no joy with this - 2nd refusal letter from bank! Am just going to sit tight now and monitor!

PC_DAVE

I think that is the best option. If you are ever unfortunate enough to be in the position whereby you can't make mortgage repayments at least there is a record of where you tried to pay them the whole amount :-)
As I stated in my correspondence with them, I'll find another investment vehicle for the money. They'll get back to us when the mortgage defaults start to rise in the next 6-12 months, just note what you offered this time around and start deducting monthly repayments from that to decide on your next offer.

makeorbrake

homer911 wrote: »

As the ECB rate rises, Tracker mortgages will become less loss making for the banks and should eventually return to profitability for them - at least in the future, they are unlikely to make enough to cover past losses unless you let the mortgage run for quite a few years..

The problem at the moment is that they can't borrow money at ECB base rates

Trying to get my head around this. Surely if the rates go up - then so do the deposit rates should go up accordingly - and the customer is better off to continue with what they're doing ie. taking the margin from their deposit interest savings instead of overpaying the mortgage?

unclebill98

If your able to pay your mortgage at the moment and are doing so, then a bank is not going to discount you to have there money back sooner!

They are more concerned with those who can/won't pay.

Kat1170

Don't tell the bank you want to pay off your mortgage, tell them you are willing to switch to a vairable rate if they write off X amount instead. Then when you are on the vairable rate just pay off the remainder of your mortgage in full. Or am I missing something that they could hit you with.

makeorbrake

Kat1170 wrote: »

Then when you are on the vairable rate just pay off the remainder of your mortgage in full. Or am I missing something that they could hit you with.

They could insert a penalty clause for early redemption....

BTW, why would they still not go for it if I tell them that I will pay it off - but only if they offer the discount ....or otherwise, I continue pay off the mortgage for the remaining 27 years - while leaving my savings on deposit (or otherwise invested) - as I am already doing?

Doesn't it make sense for them? Surely they need to get money back in right now?

unclebill98

makeorbrake wrote: »

They could insert a penalty clause for early redemption....

BTW, why would they still not go for it if I tell them that I will pay it off - but only if they offer the discount ....or otherwise, I continue pay off the mortgage for the remaining 27 years - while leaving my savings on deposit (or otherwise invested) - as I am already doing?

Doesn't it make sense for them? Surely they need to get money back in right now?

Yes, banks need money. But your repayment is a drop in the ocean to what they need. They will make more off you if you continue paying your mortgage for 27 years.

They win if you leave your savings there, the win if you invest with them too

So the only way you will win is if you pay off your mortgage and save thousands on interest.

makeorbrake

unclebill98 wrote: »

Yes, banks need money. But your repayment is a drop in the ocean to what they need.

Of course it is - however, if they put a scheme in place, then it would be significant - would it not? The bank I'm with were very aggressive in offering the lowest of rates back in 2007 - that I switched to them back in '07 - after only 2 years with my existing provider. ie. ECB+0.51%

unclebill98 wrote: »

They will make more off you if you continue paying your mortgage for 27 years.

My understanding is that they won't??

unclebill98 wrote: »

They win if you leave your savings there, they win if you invest with them too

They have not seen a cent of my savings - nor have they seen an actively used current account from me. They *might* see my savings if they ever offer the best 1 year fixed at any stage (that's if I leave my savings in IRL - but that's another story entirely!).

unclebill98 wrote: »

So the only way you will win is if you pay off your mortgage and save thousands on interest.

I don't see it that way right now. I make more in interest via my 1 year fixed accounts (even after dirt). Furthermore, for right now, I'm squeezing maximum value out of mortgage interest relief...

Doom

harr wrote: »

rather not say,pm sent

Pm me please