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ECB and tracker mortgages

  • 12-04-2012 11:38am
    #1
    UpsidedownA
    Registered Users, Registered Users 2 Posts: 12 ✭


    The tracker mortgages are only loss making because the banks didn't lend money that they already had, but borrowed it themselves, and now have to borrow money at a higher rate than they can charge the consumer to pay those borrowings back. Is that right?

    Couldn't the ECB solve the problem of tracker mortgages once and for all by loaning banks with trackers on their books exactly what they need to finance existing trackers at a rate which makes trackers profitable or at least at break even level? All they need say is that this deal applies to existing trackers only, so the banks won't be tempted to offer any more of them. Why doesn't the ECB consider something like this?


Comments

  • #2
    beeftotheheels
    Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    It can't other than to BoI because we own the other banks. Lending to banks owned by a country on preferential rates would constitute monetary financing contrary to Art 123 TFEU.

    BoI already gorged itself on the LTRO monies so is already borrowing a hell of a lot from the ECB at very low rates, and it doesn't have a tracker problem.


  • #3
    UpsidedownA
    Registered Users, Registered Users 2 Posts: 12 ✭UpsidedownA


    Thanks for the prompt reply!


  • #4
    beeftotheheels
    Registered Users, Registered Users 2 Posts: 1,675 ✭✭✭beeftotheheels


    UpsidedownA wrote: »
    Thanks for the prompt reply!

    I may have been a bit heavy with the jargon so just read the words "they can't".

    Good idea though, we need people thinking things through in order to figure out what might be possible. Just for now what you suggested is not possible.


  • #5
    n900guy
    Registered Users, Registered Users 2 Posts: 288 ✭✭n900guy


    UpsidedownA wrote: »
    The tracker mortgages are only loss making because the banks didn't lend money that they already had, but borrowed it themselves, and now have to borrow money at a higher rate than they can charge the consumer to pay those borrowings back. Is that right?

    Couldn't the ECB solve the problem of tracker mortgages once and for all by loaning banks with trackers on their books exactly what they need to finance existing trackers at a rate which makes trackers profitable or at least at break even level? All they need say is that this deal applies to existing trackers only, so the banks won't be tempted to offer any more of them. Why doesn't the ECB consider something like this?

    Does the ECB not want to make money by debt servitude now? That would be a surprises for a central bank. Keep devaluing, maintain debt repayments and devalue the cuurency of the earnings.

    Mmmm...profit......


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