Anyone else pi$$ed of at subsiding tracker mortgages?

eamo12

Interesting letter below to a Clare newspaper:

The ruling classes must all be on tracker mortgages, these subprime remnants of the Celtic tiger era because it's an issue that's rarely brought up in the media.

Why are variable rate mortgage holders left picking up the tab, a direct subsidy amounting to hundreds of Euro EVERY MONTH to tracker holders? It is a fact that variable rates are so high because tracker rates cannot be touched, so one must shoulder the burden for the other.

"It's in the contract" we are told and suddenly contracts become sacrosanct for tracker holders anyway and on that issue only. It is a fact that if our politicians had decided not to bail out the disastrous practices of the banks (like issuing trackers to the comfortable middle classes), then those tracker mortgages would not be allowed to enjoy this 'golden pension' subsidy i.e. the tracker mortgages would have been repackaged as variable rates to reflect the market rates (at least). What good is a tracker rate contract when your bank has gone bust, but WE bailed them out - notice how everyone has to shoulder the burden for that bailout.

It is nothing more than an immoral direct tax on the poor who got caught buying property at the top of the boom to fund the Celtic lifestyles of those who benefited the most out of the recklessness of the banks and politicians.

When I hear my tracker colleagues discussing holidays these days, I can't help thinking that if they paid me 3 or 4 hundred Euro NET extra a month, maybe I too could think about going on a holiday as well.

blorg

Because people on tracker mortgages took out a contract? I'm sure there would be a lot of tracker mortgage holders that would be quite happy to have their contracts voided, if this left them no longer owing the money.

Correct me if I am wrong but a bank going bust would not void a tracker mortgage contract so the bailout is irrelevant.

sarumite

eamo12 wrote: »

Interesting letter below to a Clare newspaper:

The ruling classes must all be on tracker mortgages, these subprime remnants of the Celtic tiger era because it's an issue that's rarely brought up in the media.

Why are variable rate mortgage holders left picking up the tab, a direct subsidy amounting to hundreds of Euro EVERY MONTH to tracker holders? It is a fact that variable rates are so high because tracker rates cannot be touched, so one must shoulder the burden for the other.

"It's in the contract" we are told and suddenly contracts become sacrosanct for tracker holders anyway and on that issue only. It is a fact that if our politicians had decided not to bail out the disastrous practices of the banks (like issuing trackers to the comfortable middle classes), then those tracker mortgages would not be allowed to enjoy this 'golden pension' subsidy i.e. the tracker mortgages would have been repackaged as variable rates to reflect the market rates (at least). What good is a tracker rate contract when your bank has gone bust, but WE bailed them out - notice how everyone has to shoulder the burden for that bailout.

It is nothing more than an immoral direct tax on the poor who got caught buying property at the top of the boom to fund the Celtic lifestyles of those who benefited the most out of the recklessness of the banks and politicians.

When I hear my tracker colleagues discussing holidays these days, I can't help thinking that if they paid me 3 or 4 hundred Euro NET extra a month, maybe I too could think about going on a holiday as well.

Unfortuantely I wasn't/am not in the financial position to buy a house so I don't fully understand the the in's and out's of tracker v's variable rate. My ignorance had me believing they were one of the same. Could you please clarify or direct me towards a link discussing what you are referring to?

danbohan

eamo12 wrote: »

Interesting letter below to a Clare newspaper:

The ruling classes must all be on tracker mortgages, these subprime remnants of the Celtic tiger era because it's an issue that's rarely brought up in the media.

Why are variable rate mortgage holders left picking up the tab, a direct subsidy amounting to hundreds of Euro EVERY MONTH to tracker holders? It is a fact that variable rates are so high because tracker rates cannot be touched, so one must shoulder the burden for the other.

"It's in the contract" we are told and suddenly contracts become sacrosanct for tracker holders anyway and on that issue only. It is a fact that if our politicians had decided not to bail out the disastrous practices of the banks (like issuing trackers to the comfortable middle classes), then those tracker mortgages would not be allowed to enjoy this 'golden pension' subsidy i.e. the tracker mortgages would have been repackaged as variable rates to reflect the market rates (at least). What good is a tracker rate contract when your bank has gone bust, but WE bailed them out - notice how everyone has to shoulder the burden for that bailout.

It is nothing more than an immoral direct tax on the poor who got caught buying property at the top of the boom to fund the Celtic lifestyles of those who benefited the most out of the recklessness of the banks and politicians.

When I hear my tracker colleagues discussing holidays these days, I can't help thinking that if they paid me 3 or 4 hundred Euro NET extra a month, maybe I too could think about going on a holiday as well.

you know i was just thinking the same thing myself and then i sat and thought about it and i realized that ..............

When I hear my tracker colleagues discussing holidays these days, I can't help thinking that i made a huge mistake in not getting a tracker myself and that i am really a begrudger in thinking that its unfair that my tracker owning friends might be better off now than i am , maybe I should stop blaming other people for my problems in not been able too afford a holiday and place the blame where it really belongs , with myself

Kurley

If trackers are killed en-masse then there would be a huge spike in defaults, requiring a larger sum to be pumped into the banks, increasing the size of the public debt and so on.

Everybody would lose out. Note, I do not have a tracker and wish I had.

sollar

Variable customers are suffering interest rate rises to cover the losses that trackers represent for the banks. Both variable and tracker customers are in trouble but the tracker customers are being protected by these new initaitives. Thats hardly fair.

If someone can't service their tracker fully then they should be lumped in with all other mortgage strugglers and a plan made to deal with them all together imo.

fliball123

eamo12 wrote: »

Interesting letter below to a Clare newspaper:

The ruling classes must all be on tracker mortgages, these subprime remnants of the Celtic tiger era because it's an issue that's rarely brought up in the media.

Why are variable rate mortgage holders left picking up the tab, a direct subsidy amounting to hundreds of Euro EVERY MONTH to tracker holders? It is a fact that variable rates are so high because tracker rates cannot be touched, so one must shoulder the burden for the other.

"It's in the contract" we are told and suddenly contracts become sacrosanct for tracker holders anyway and on that issue only. It is a fact that if our politicians had decided not to bail out the disastrous practices of the banks (like issuing trackers to the comfortable middle classes), then those tracker mortgages would not be allowed to enjoy this 'golden pension' subsidy i.e. the tracker mortgages would have been repackaged as variable rates to reflect the market rates (at least). What good is a tracker rate contract when your bank has gone bust, but WE bailed them out - notice how everyone has to shoulder the burden for that bailout.

It is nothing more than an immoral direct tax on the poor who got caught buying property at the top of the boom to fund the Celtic lifestyles of those who benefited the most out of the recklessness of the banks and politicians.

When I hear my tracker colleagues discussing holidays these days, I can't help thinking that if they paid me 3 or 4 hundred Euro NET extra a month, maybe I too could think about going on a holiday as well.

Lets get one thing straight tracker mortgage holders are paying back the money they borrowed with interest and are at the mercy of the ECB changes in interest rates...So how are people on normal variable rates subsidising these people?? as far as I am aware anyone paying back a tracker mortgage will pay back the full amount + the interest rate set by the ECB + an extra 1 or 2 % on top..

Direct your anger at the banks not people who are paying for what they borrowed and then some

andrewdeerpark

People what part of a free market economy society do you not understand?

Trackers were a great deal at the time available to all frugal people (the ones without property portfolios, massive houses and big jeeps rolled into a stupid size mortgage). You do not do the paperwork or qualify and sign up, your tough luck. I have no interest in paying for others financial delinquency.

I am tired of this bailout culture that has come from the top down, everyone wants assistance now: we either have capitalism or communism.

Cool Mo D

fliball123 wrote: »

Lets get one thing straight tracker mortgage holders are paying back the money they borrowed with interest and are at the mercy of the ECB changes in interest rates...So how are people on normal variable rates subsidising these people?? as far as I am aware anyone paying back a tracker mortgage will pay back the full amount + the interest rate set by the ECB + an extra 1 or 2 % on top..

Direct your anger at the banks not people who are paying for what they borrowed and then some

Tracker mortgages are subsidised because the interest rates they are paying on their debt is lower than the interest rates the bank paid to borrow that money on their behalf, so that banks are making a loss on tracker mortgages.

Therefore, banks are increasing their variable mortgage interest rates to claw back some of the money they are losing on the trackers.

fliball123

Cool Mo D wrote: »

Tracker mortgages are subsidised because the interest rates they are paying on their debt is lower than the interest rates the bank paid to borrow that money on their behalf, so that banks are making a loss on tracker mortgages.

Therefore, banks are increasing their variable mortgage interest rates to claw back some of the money they are losing on the trackers.

Eh no the money they have borrowed in the mean time is at a higher rate...Your not seriously suggesting that a bank say aib gave say 100k mortgage to Job bloggs on a tracker of say +1% of ECB at the time. So are you saying they paid more for this 100k to the ECB..I dont think so..Get your knowledge straight the money borrowed for this money was at the ECB rate and a person on a tracker is paying a certain % higher which easily covers what was borrowed for their individual mortgage...so in fact the normal variable mortgage holders are paying for other areas such as money borrowed in between and of course bankers bonuses

andrewdeerpark

Remember Endowment Mortgages (more popular in England)

http://news.bbc.co.uk/2/hi/business/404872.stm

Well in that case the punter lost out, this time its the shoe on the other foot. So tough luck on the banks. Period.

Cool Mo D

fliball123 wrote: »

Eh no the money they have borrowed in the mean time is at a higher rate...Your not seriously suggesting that a bank say aib gave say 100k mortgage to Job bloggs on a tracker of say +1% of ECB at the time. So are you saying they paid more for this 100k to the ECB..I dont think so..Get your knowledge straight the money borrowed for this money was at the ECB rate and a person on a tracker is paying a certain % higher which easily covers what was borrowed for their individual mortgage...so in fact the normal variable mortgage holders are paying for other areas such as money borrowed in between and of course bankers bonuses

When the bank borrows money to get you a mortgage, they don't borrow it all in one go for 30 years. Banks have to constantly roll over some of their debt with new debt.

Kurley

There are lots of people in this country that are in an awful position because they borrowed unwisely. They are stuck with their debts. Conversely there are those that are ok or even doing very well as they borrowed wisely and were able to get a tracker mortgage. You can say the banks lent in this case unwisely but that should be their loss and not the borrowers.

It would be deeply unfair to penalise those on trackers for the poor choices of others.

fliball123

Cool Mo D wrote: »

When the bank borrows money to get you a mortgage, they don't borrow it all in one go for 30 years. Banks have to constantly roll over some of their debt with new debt.

Yes but the tracker is tracked to the ECB rate...So say that 100k is split into 10 years 10k a year..if ECB is 1% then the tracker mortgage holder pays back the amount with the 1% interest + the additoin 1% on top and if the ECB rate goes up so does the amount that the tracker mortgage holder pays..So regardless of what the bank does the tracker mortgage holder is paying for what they borrowed plus some

BaZmO*

sollar wrote: »

Variable customers are suffering interest rate rises to cover the losses that trackers represent for the banks. Both variable and tracker customers are in trouble but the tracker customers are being protected by these new initaitives. Thats hardly fair.

What new initiatives?

sollar wrote: »

If someone can't service their tracker fully then they should be lumped in with all other mortgage strugglers and a plan made to deal with them all together imo.

A tracker mortgage is just like any contract, if either side break the contract there are penalties, or am I missing something?

andrewdeerpark wrote: »

I am tired of this bailout culture that has come from the top down, everyone wants assistance now: we either have capitalism or communism.

Yeah but the problem at the moment is that we seem to have Capitalism for the poor and Communism for the rich.

EoghanConway

sollar wrote: »

Variable customers are suffering interest rate rises to cover the losses that trackers represent for the banks.

And losses due to mismanagement, waste, flight of deposits etc etc.

sollar wrote: »

Both variable and tracker customers are in trouble but the tracker customers are being protected by these new initaitives. Thats hardly fair.

Contract law is not new. Variable customers are also protected by their contract, it's just that right now the variable rate is not as good. It is entirely possible but admittedly unlikely that the ECB could raise it's rate to 10% and the banks could set variable rates to, say, 7% thus variable would be better than tracker.

sollar wrote: »

If someone can't service their tracker fully then they should be lumped in with all other mortgage strugglers and a plan made to deal with them all together imo.

They are. The banks are only too happy to try to push people off tracker mortgages via restructuring whenever the opportunity arises.

eamo12

andrewdeerpark wrote: »

People what part of a free market economy society do you not understand?

Trackers were a great deal at the time available to all frugal people (the ones without property portfolios, massive houses and big jeeps rolled into a stupid size mortgage). You do not do the paperwork or qualify and sign up, your tough luck. I have no interest in paying for others financial delinquency.

I am tired of this bailout culture that has come from the top down, everyone wants assistance now: we either have capitalism or communism.

Ah, that's the point though - if capitalism were allowed to run it's course, then the banks that would have gone bust. What would have happened to the tracker mortgages then do you think? Extremely doubtful that they would stay at the low rate they are now, contract or no contract.

So it's the tracker mortgage holders that are getting the handout. The point is why should variable rate mortgage subsidize this handout??

sollar

BaZmO* wrote: »

A tracker mortgage is just like any contract, if either side break the contract there are penalties, or am I missing something?

And if they can't service their tracker and the bank is losing on it, the bank should throw them of it onto a variable.

ei.sdraob

Nver mind trackers

why are taxpayers subsidizing mortgage holders in general with reliefs and landlords with rent allowance?

blorg

eamo12 wrote: »

Ah, that's the point though - if capitalism were allowed to run it's course, then the banks that would have gone bust. What would have happened to the tracker mortgages then do you think? Extremely doubtful that they would stay at the low rate they are now, contract or no contract.

Explain the mechanism by which when a bank goes bust mortgage holders have their contracts voided. AFAIK the debts would simply be sold to a new institution (at a discount if they were now unprofitable) and the T&Cs maintained.

What is the difference, in your mind, between a bank changing people (who are keeping up their contracted payments) off a tracker, and the debtor simply deciding they don't want to pay the money back any more?

BaZmO*

sollar wrote: »

And if they can't service their tracker and the bank is losing on it, the bank should throw them of it onto a variable.

They do

andrewdeerpark

eamo12 wrote: »

Ah, that's the point though - if capitalism were allowed to run it's course, then the banks that would have gone bust. What would have happened to the tracker mortgages then do you think? Extremely doubtful that they would stay at the low rate they are now, contract or no contract.

So it's the tracker mortgage holders that are getting the handout. The point is why should variable rate mortgage subsidize this handout??

Wrong, with a failed out bank selling off its loan book it would have to honour the loan contract whether variable or tracker.

I am all for letting banks fail but your analysis is incorrect.

seamus

Tracker mortgages are getting specific protection because banks have been using their size/weight to bully customers into removing the tracker rate. They rely on customers' ignorance and apathy and tell them that, "This is what's happening, screw you", when the customer has a legal contract which prevents the bank from making these changes.
The government are simply trying to protect people's legal rights.

In addition to that, removal of tracker rates will see a mass default.

Basically here's the scenario; A supplier supplies goods to customer A at an agreed rate, which is beneficial to the supplier at the time.
But the cost of the goods has increased massively so the supplier must increase the cost of the goods that he's supplying to customer B in order to make up the loss that he's making on customer A.
It's not customer A's problem that the company is undercharging him, it's the company's problem. Their poor foresight has led to them selling goods at a loss.

Of course the contract with customer A can be cancelled, but they would have to either forgoe the value of goods already supplied or pay the customer a hefty get-out penalty to move them onto a less beneficial contract.

In a banking context, if tracker mortgages are unsustainable, the banks will either have to write off these mortgages or offer the customers money to come off a tracker rate.

It's free market economics. There are plenty of people who aren't "middle class fatcats" who are on tracker mortgages and relying on that stability to keep food their bellies.

In reality, the banks only started removing tracker rates after the start of the crash and they were offering tracker rates well past Autumn 2006 (which was the peak), so anyone who didn't get a tracker rate at the top of the boom has only themselves to look at.

Sponge Bob

eamo12 wrote: »

( Posted by Eamo not written by Eamo, the comment below is aimed at the original letter writer)

"Why are variable rate mortgage holders left picking up the tab, a direct subsidy amounting to hundreds of Euro EVERY MONTH to tracker holders? "

Because you were TOO STUPID to change to a tracker when you could...between 2004 and 2008 or so. Most variable rate mortgagees evidently did.

Godge

Irish begrudgers never go away. People make decisions and take risks and should live with them.

Tracker mortgages are a good deal now and well done to those who availed of them. However, they are not without risk. In the unlikely (but not impossible) event that we endure a period of hyperinflation sometime over the next ten years, and the ECB raises rates to extremely high levels, those on tracker mortgages will see big increases in costs. In the same way that not all reductions are passed on the variable mortgages, it is possible that some of the temporary large increases in such a case would not be passed on by banks to variable mortgages. In such a scenario the tracker mortgage holder would be doing less well vis-a-vis a variable mortgage holder. Will all the variable mortgage holders who are crying and wailing now be willing to subsidies the tracker mortgage holders then? and don't forget, fixed mortgage holders will be doing best of all then.

I think not. If life is to be fair, you should reap what you sow. At the moment that means a good crop if you are a tracker mortgage holder. Won't always be the case. The trick is to pay off your debt while you are on a relatively good interest rate.

Xcellor

Thanks to my wife we changed to tracker mortgage. ECB+1.25%.

At one stage we were paying more than standard variable. Then the sh1t hit the fan and instead of getting letters saying the rate had increased now it was dropping. As a result now making overpayments to mortgage for the last year.

Not going on foreign holidays though.

Guy:Incognito

Cool Mo D wrote: »

Tracker mortgages are subsidised because the interest rates they are paying on their debt is lower than the interest rates the bank paid to borrow that money on their behalf, so that banks are making a loss on tracker mortgages.

Therefore, banks are increasing their variable mortgage interest rates to claw back some of the money they are losing on the trackers.

If interest rates shot up to 15-16% like in the 80's should the banks let the people away with the difference between what the banks pay in interest on the mony borrowed and what the people are paying back or does it only work when it's low and other people are jealous?

BostonB

Godge wrote: »

...People make decisions and take risks and should live with them....

The trick is to pay off your debt while you are on a relatively good interest rate.

IMO, anyone on a variable, needs to accept they've made a mistake, and learn from it.
The best option is to pay it off as soon as possible. As you'll pay less interest.

leeroybrown

I love the fact that people are lambasting others for having made a good financial choice where for once the banks aren't the ones screwing them. The OP and anyone else who moans about tracker mortgages is just a bitter begrudger because that they didn't have the foresight to switch to one when it was the smart financial choice. Boo hoo...

Welease

seamus wrote: »

In reality, the banks only started removing tracker rates after the start of the crash and they were offering tracker rates well past Autumn 2006 (which was the peak), so anyone who didn't get a tracker rate at the top of the boom has only themselves to look at.

Agreed.
We picked up a tracker in Dec 2007 from AIB, which was well into the housing slide..

eamo12

Sponge Bob wrote: »

Because you were TOO STUPID to change to a tracker when you could...between 2004 and 2008 or so. Most variable rate mortgagees evidently did.

That maybe so, but that is not the point. Again, why should low tracker mortgage rates be allowed on banks that were bailed out and are now effectively state owned? If natural economics were applied, these banks would be bust and the mortgage rates would have to be normalized.

BTW, calling 200,000 variable mortgage "TOO STUPID to change to a tracker when you could" is unbecoming of an Civil Servant like you, Sponge bob :pac:

BostonB

And variables would increase too. Thats a lose lose scenerio. (If you accept that could happen)

Kurley

The thing to remember is that a lot of people in this country tried to make profit on property, specifically their own homes, thinking buy now then trade up in a few years. Were they ever going to share the profits made with the rest of us? No. So why should those who made good choices have to take the pain from those who made bad choices?

seamus

eamo12 wrote: »

That maybe so, but that is not the point. Again, why should low tracker mortgage rates be allowed on banks that were bailed out and are now effectively state owned?

Being state owned is irrelevant. State owned or not, the contracts exist and the State cannot just ride roughshod over them.

If the banks go bust, there are two things you can do:

1. Default on your debts (all your mortgage holders get their debt written off)
2. Sell your loan book, in which case the contracts get transferred to the buyer but still can't be changed.

The consequences of 1. on the economy are hard to say. If everyone is suddenly "given" their house overnight, you will collapse the value of the property in the state. So those who don't have a mortgage with a failed bank are completely screwed because their neighbours can afford to sell for €10,000 and emigrate due to having no mortgage.

andrewdeerpark

Any bank that breaks my tracker I will sue and win in court.

I like others have a legal contract that I will defend. As for the moaners on variable tough.

BaZmO*

Sponge Bob wrote: »

Because you were TOO STUPID to change to a tracker when you could...between 2004 and 2008 or so. Most variable rate mortgagees evidently did.

Not really a fair thing to say, a lot of people bought around that time and weren't able to avail of the Tracker rates.

Either way, personally I don't have one, but I certainly don't begrudge anybody that does have one. I also think it's crazy that variable mortgages, in any form, exist. I think all mortgages should be fixed.

leeroybrown

eamo12 wrote: »

Again, why should low tracker mortgage rates be allowed on banks that were bailed out and are now effectively state owned?

As seamus points out above, just because the banks are technically state owned doesn't mean the state can just renege on a legally binding contract with a mortgage holder. If they were even to consider it the Attorney General would be telling them to forget about it sooner than they could mention the idea. The mortgage holders hold a very strong legal position on this issue.

I have a variable rate mortgage and pay slightly more interest than people with a similar loan who are on trackers. Good luck to them. I don't moan about it.

smokingman

I too think this is disgraceful!

Also, my neighbour has a '92 reg car - mine is a '91 but I think the guards should confiscate his and hand it over to me!

To the OP: grow a pair and accept some personal responsibility will ya! :rolleyes:

woody1

so, i went for a mortgage , weighed up the pros and cons , thought about it for a while, thought about it for another while, ignored the bank manager who was pushing me to go for a fixed rate and took the tracker option, so i should be punished for that....
a friend of mine borrowed less than me he pays back less should the government cut my mortgage in half so that were both equal
or should i have to live with the consequences of my decisions...

woody1

sorry smokingman you made the same point as me at the same time i prob wouldnt have bothered posting anything if youd got there before me

leeroybrown

Another thing that people should remember is that a lot of lenders securitised their mortgage books in order to raise investment capital. The interest costs on these securities are probably higher than the interest paid by mortgage holders on variable rates let alone trackers. They're losing money on everything...

average_runner

People stop moaning about trackers. When poeple had the choice between tracker, fix, or variable, people choosed the one they thought would save them the most money. People that picked the variable and fixed, lost and thats the fund of taking a gamble.


For the people get mortages now, well prices have dropped.

spank_inferno

OP, you should take it up with your Mortgage provider.

Its not the fault of those on trackers that fortune smiles on them.... for now

However should ECB rates explode, so will their payments.

Will those on lower fixed rates then receive the OPs scorn?

eamo12

leeroybrown wrote: »

As seamus points out above, just because the banks are technically state owned doesn't mean the state can just renege on a legally binding contract with a mortgage holder. If they were even to consider it the Attorney General would be telling them to forget about it sooner than they could mention the idea. The mortgage holders hold a very strong legal position on this issue.

I have a variable rate mortgage and pay slightly more interest than people with a similar loan who are on trackers. Good luck to them. I don't moan about it.

Well, trackers pay €180 per 100K than variables at the moment which isn't slightly less by any means.

But the general response to this is tough, live with it. The fact is it's a massive difference some mortgage holders have to pay.

But, what would have happened IF the Govt did not bail out the banks? The tracker mortgage holders have had a contract, the bank is bust and probably some liquidator involved. Then what?

The liquidator could say the contract has to be honored, but to whom?? The whole banking system is insolvent, there is no one to take over the crazy loan. Anyone who would contemplate servicing the loan would demand it lower cost (but the bank has no assets after paying senior bond holders) or increasing the interest rate and nullify the contract.

Enter the Government who effectively honours the low interest rate by bailing out the banks and presto, the contract stands again because there is now someone to sue - yes, the taxpayer.

What no one here seems to get is that their tracker rates exist only because of a political decision, not because of some great foresight in the past.

BostonB

eamo12 wrote: »

...
But, what would have happened IF the Govt did not bail out the banks? The tracker mortgage holders have had a contract, the bank is bust and probably some liquidator involved. Then what? ...

Why do you think it would only effect trackers. What about variables and fixed rates. What about the effect on those.

eamo12

spank_inferno wrote: »

OP, you should take it up with your Mortgage provider.

Its not the fault of those on trackers that fortune smiles on them.... for now

However should ECB rates explode, so will their payments.

Will those on lower fixed rates then receive the OPs scorn?

Thankfully, my mortgage is well paid off, but it's striking the attitude displayed by the 'haves' here. Variable rate mortgages (not fixed variable) will always be more than tracker rates which are effectively the type of sub-prime mortgages that got the world into this mess in the first place.

eamo12

BostonB wrote: »

Why do you think it would only effect trackers. What about variables and fixed rates. What about the effect on those.

That's exactly the point - but one thing is for sure, there would be no government guaranteed golden tracker rate.

seamus

eamo12 wrote: »

Anyone who would contemplate servicing the loan would demand it lower cost (but the bank has no assets after paying senior bond holders) or increasing the interest rate and nullify the contract.

So if the contract is null, then there is no contract and the mortgage holder now owes nobody anything. Wahey!

I don't think you understand how contract law works. A contract is an agreement between two parties. That contract cannot be amended by either party without the agreement of the other. If one party wishes to transfer the contract to another party, they can do so without amending the contract but the new party to the contract is still bound by the original.

It doesn't matter if one party is a multi-billion euro bank or the United States, the law still applies.

You're pissed that the government has taken on a loss-making loan. I don't see how that's the tracker holders' problem?

Sesshoumaru

eamo12 wrote: »

That's exactly the point - but one thing is for sure, there would be no government guaranteed golden tracker rate.

It's already been explained to you what would happen to those trackers even if the banks weren't state owned and had been let go bust. You clearly don't understand or don't want to understand. You come across as a stereotypical Irish begrudger.

Sponge Bob

eamo12 wrote: »

Variable rate mortgages (not fixed variable) will always be more than tracker rates which are effectively the type of sub-prime mortgages that got the world into this mess in the first place.

This is plain wrong Trackers were never offered to sub prime customers, only to PRIME customers. Sub Prime customers were on a super variable rate to compensate for the enhanced risk.

Most reasonable tracker rates were contingent on sub 80% LTV and rather few were offered to 100% LTV customers. I think only Bank of Scotland gave a tracker on 100% LTV ......look what happened to them !

Half of Start Mortgages 100% Sub Prime book is now 90 days in arrears. Corresponding figures from prime lenders would be dramatically lower.

leeroybrown

eamo12 wrote: »

Variable rate mortgages (not fixed variable) will always be more than tracker rates which are effectively the type of sub-prime mortgages that got the world into this mess in the first place.

The concept of a tracker mortgage is a fundamentally sound idea and there's nothing sub-prime about it. The bank charge a pre-defined premium over the base that the bank can re-borrow this money. A tracker mortgage given to someone who can't afford it is no different than a variable rate mortgage given to someone who can't afford it.

eamo12 wrote: »

That's exactly the point - but one thing is for sure, there would be no government guaranteed golden tracker rate.

Whoever takes on the loan book of the banks (be it the government, another lender, etc) would be contractually required to honour the tracker agreement.

You seem to developed an huge chip on your shoulder about tracker mortgages. The people who have them made a smart financial choice and the vast majority continue to meet their contractual repayments. The second they start missing payments the bank will force them onto a variable rate mortgage. The fact that the banks securitised (borrowed using the loan book as collateral) these loans and lost the money in the markets is not the individual mortgage holder's problem.