What would it take for you to give up your tracker mortgage?

Pawwed Rig

D3PO wrote: »

that scenario wouldn't exist (or at least shouldn't if the person your talking about is financially astute which given the outlined scenario would suggest they are)

if they had 60k on deposit its because the 60k on deposit even after dirt is yielding more in interest than the same in savings if it were paid off the mortgage principle. Therefore the return you suggest they may get from a deal and paying off the principle with their savings wouldn't exist

Yeah I know there are alot of assumptions here. The main one being that currently the €60,000 is yielding a higher rate than they are paying on the tracker but yielding a lower rate than would be if the person took the 40K writedown and was moved onto the standard variable (which would be the case in alot of situations).

MMAGirl

Tombo2001 wrote: »

Again I will ask the question.....

Has any bank in Ireland.....

negotiated one single deal....

.....to get somebody off a tracker mortgage and on to a variable***

.....and offerred debt writedown in return....

Is anyone aware of this happening even once?

I amnt.....

And yet every couple of months I see this media discussion about how much you would have to get to give up the tracker, as if banks were out knocking door to door beggin people to do this.

I'd be delighted to negotiate 50k off my mortgage to give up the tracker.

Its not an option.....its not available......its a fantasy......



*** and I'm not talking about cases where the mortgage holder cant pay.....thats a different type of deal.

Yes. I know of one person myself who has done it. And if you look on AAM they talk of it happening too.

makeorbrake

Tombo2001 wrote: »

Again I will ask the question.....

Has any bank in Ireland.....

negotiated one single deal....

.....to get somebody off a tracker mortgage and on to a variable***

.....and offerred debt writedown in return....

Is anyone aware of this happening even once?

I amnt.....

And yet every couple of months I see this media discussion about how much you would have to get to give up the tracker, as if banks were out knocking door to door beggin people to do this.

I'd be delighted to negotiate 50k off my mortgage to give up the tracker.

Its not an option.....its not available......its a fantasy......



*** and I'm not talking about cases where the mortgage holder cant pay.....thats a different type of deal.

Yes, the PTSB....not so much " off a tracker " ...they gave (and I'm open to correction here) 10% extra for any capital payment that was made against one of their tracker mortgages.

Notwithstanding that, I dont expect the banks to make deals with the ordinary joe. They can sell loan books at institutional level for a few cents in the euro - but giving the ordinary joe a break is not how the game is played apparently.


I'd imagine that they have also ran the numbers and know what % will abandon their tracker to trade up OR for whatever other purpose. Only a few of us will go the distance (me among them - as it's the cheapest financing I will see in my lifetime at ecb+0.5%).....but that has been factored in. So be it...


Lastly, some of the calcs on here are widely exaggerated in terms of what a tracker may be worth. Please check some key threads over on the AAM forum - where more exact cals have been carried out.

All I can say to anyone on one - is mind it. If you feel that you need to move, consider your options. In my case, I will be buying again - but I have no intention of giving up the initial tracker (nor is it selling time...nor will it be for another 10 years!).

adpk

makeorbrake wrote: »

Yes, the PTSB....not so much " off a tracker " ...they gave (and I'm open to correction here) 10% extra for any capital payment that was made against one of their tracker mortgages.

Notwithstanding that, I dont expect the banks to make deals with the ordinary joe. They can sell loan books at institutional level for a few cents in the euro - but giving the ordinary joe a break is not how the game is played apparently.


I'd imagine that they have also ran the numbers and know what % will abandon their tracker to trade up OR for whatever other purpose. Only a few of us will go the distance (me among them - as it's the cheapest financing I will see in my lifetime at ecb+0.5%).....but that has been factored in. So be it...


Lastly, some of the calcs on here are widely exaggerated in terms of what a tracker may be worth. Please check some key threads over on the AAM forum - where more exact cals have been carried out.

All I can say to anyone on one - is mind it. If you feel that you need to move, consider your options. In my case, I will be buying again - but I have no intention of giving up the initial tracker (nor is it selling time...nor will it be for another 10 years!).

The whole system does not make sense.

Why has there been so little foreclosures in Ireland as compared to the parts of the USA that saw similar reckless lending practices combined with a massive property bubble e.g Florida, Nevada.

Why have the banks not offered "outs" like short sales here?

My guess is that the banking sector is operating as if there were a government entity and not a private sector. Probably feel they can go back to the public trough at any time...so why act in a commercial fashion and give anyone a break. Also probably significant government influence on the banks to keep this house of cards still sorta standing.

What/where is the AAM thread?
I may as well humor myself by seeing what I could get as a write-down, although I cannot see it happening to any level that would make me give up my tracker.

Ray Palmer

adpk wrote: »

Why have the banks not offered "outs" like short sales here?
.

Get this, different country different laws.

makeorbrake

adpk wrote:

Why has there been so little foreclosures in Ireland as compared to the parts of the USA that saw similar reckless lending practices combined with a massive property bubble e.g Florida, Nevada.

Why have the banks not offered "outs" like short sales here?

My guess

What/where is the AAM thread?
I may as well humor myself by seeing what I could get as a write-down, although I cannot see it happening to any level that would make me give up my tracker.

You will find the info you are looking for - on the aam forum (askaboutmoney.com) - type "tracker into the search and you will find all the info you could possibly need on the subject.

Furthermore, you ask the question (rightly!) as to why this market is not functioning like others i.e. They simply repossess and dump onto the market those properties and get all that unpleasantness off their balance sheets.
Again, you will find plenty of discourse on this on aam. By all accounts there are a couple of factors....
- Maybe the banks don't want to realise where exactly their balance sheets stand at exactly - it could suit them (or their current senior management) to draw things out.
- The other thing you touched on - politically, there seems to be some belief that people cant be turfed out of " their homes ".
- Legally - they simply cant repossess right now (until there is a change in the law).


On the political point, is there an effort to try and protect a certain class of people here? I.e. The people who seemed to have got their fingers burnt the most are middle to upper /prefessional classes who couldn't pass up the " opportunity " of multiple property purchases.

It's taken the IMF to demand that they law be changed to facilitate repossessions. WHY has it taken an external entity to try and bring this about? You would have to ask WHY our own "'powers that be " could not do that off their own bat?


Getting back to your tracker - as someone else on here has indicated, it's probably unlikely that any deals will be offered. However, if they are, the expectation has to be reasonable - adn one of the key threads on AAM has outlined how a reasonable figure can be arrived at.

Personally, I'll be keeping mine - and financing it monthly payment by monthly payment. ;-)

ronan45

Zaph wrote: »

My tracker is at ECB +0.5%, so they'd need to write off a minimum of 75% of what's outstanding before I'd even have the discussion with them.

Ok So the tracker is AMAZING value at present....
But when the interest starts to rise as we all know it will, for instance.
Lets say the ECB rate over the next 10 years creeps up to say 7% Will the tracker be still be seen as great value then? Is the tracker mortgage GUARUNETEED to be value for its entire duration (30 years or so) or is the Crazy low ECB rate just a temporary bonanza that will fizzle out once the ECB starts pumping the rate back up?

Balmed Out

ronan45 wrote: »

Ok So the tracker is AMAZING value at present....
But when the interest starts to rise as we all know it will, for instance.
Lets say the ECB rate over the next 10 years creeps up to say 7% Will the tracker be still be seen as great value then? Is the tracker mortgage GUARUNETEED to be value for its entire duration (30 years or so) or is the Crazy low ECB rate just a temporary bonanza that will fizzle out once the ECB starts pumping the rate back up?

Will it not just be an expensive mortgage which is still cheaper then the equivalent variable?

Ray Palmer

Balmed Out wrote: »

Will it not just be an expensive mortgage which is still cheaper then the equivalent variable?

Yes. If the rate goes up the fixed rates will go up. You can only fix for a relatively short time here and it is pricy to do so.

If the ECB rate goes to 9% expect fixed rates at about 11-14%. It is all a relative gamble but a tracker is and has been worth a lot for about 10 years at present and probably worth a lot for the next 5 years without a big deal. That could easily be more than half the life of a mortgage.

ronan45

Zaph wrote: »

My tracker is at ECB +0.5%, so they'd need to write off a minimum of 75% of what's outstanding before I'd even have the discussion with them.

But When the ECB rates gradually start to go up over the next 10 years then why would the bank offer to write off 75% of the mortgage? I would have thought the bonanza Low ECB rates will be over in less then 10 years? I would assume you have probably only a few years left on yours

D3PO

ronan45 wrote: »

But When the ECB rates gradually start to go up over the next 10 years then why would the bank offer to write off 75% of the mortgage? I would have thought the bonanza Low ECB rates will be over in less then 10 years? I would assume you have probably only a few years left on yours

I think you misunderstand the value of a tracker Ronan. The trackers value to the holder is based on the fact the rate will always be better than the equivalent variable and or fixed rate.

It is currently loss making to the banks due to the low rates because they cant borrow on the Euribor or anywhere else for that matter at lower rates meaning they lose out.

Now if the ECB rate moved to 6 - 7 % the tracker owner would still have value over an equivalent variable or fixed rate customer, however given the rate would now supersede what a bank could likely borrow on it would no longer be loss making for the bank and yes you are correct they would not want to write anything off in this scenario.

Given there is no prospect of a rise anytime soon (and in fact most analysts expect the ECB to cut a quarter point off the base rate at their next meeting) the prospect of 6-7% rates anytime in the short to medium term look remote.

ronan45

D3PO wrote: »

I think you misunderstand the value of a tracker Ronan. The trackers value to the holder is based on the fact the rate will always be better than the equivalent variable and or fixed rate.

It is currently loss making to the banks due to the low rates because they cant borrow on the Euribor or anywhere else for that matter at lower rates meaning they lose out.

Now if the ECB rate moved to 6 - 7 % the tracker owner would still have value over an equivalent variable or fixed rate customer, however given the rate would now supersede what a bank could likely borrow on it would no longer be loss making for the bank and yes you are correct they would not want to write anything off in this scenario.

Given there is no prospect of a rise anytime soon (and in fact most analysts expect the ECB to cut a quarter point off the base rate at their next meeting) the prospect of 6-7% rates anytime in the short to medium term look remote.

Thank you D3PO nicely worded now I get you, So for instance if the ECB did go up to say 7%. In that scenario your Banks Standard Variable would maybe be 8.5% and a 5 year fixed be possibly 9%. So really in all circumstances the tracker does win out over even the long term. Cheers Buddy

D3PO

ronan45 wrote: »

Thank you D3PO nicely worded now I get you, So for instance if the ECB did go up to say 7%. In that scenario your Banks Standard Variable would maybe be 8.5% and a 5 year fixed be possibly 9%. So really in all circumstances the tracker does win out over even the long term. Cheers Buddy

Pretty much yes.

jester77

ronan45 wrote: »

Thank you D3PO nicely worded now I get you, So for instance if the ECB did go up to say 7%. In that scenario your Banks Standard Variable would maybe be 8.5% and a 5 year fixed be possibly 9%. So really in all circumstances the tracker does win out over even the long term. Cheers Buddy

If you fixed now for long term, you could win out. I am after fixing with my bank here for 20 years at 3.1%. ECB rates could stay below that over the 20 years and I might be losing out, but I have at least the peace of mind knowing that my mortgage repayments are not going to change for 20 years.

ronan45

jester77 wrote: »

If you fixed now for long term, you could win out. I am after fixing with my bank here for 20 years at 3.1%. ECB rates could stay below that over the 20 years and I might be losing out, but I have at least the peace of mind knowing that my mortgage repayments are not going to change for 20 years.

Never heard of a 20 year fixed, which bank is that? Also are you currently on a tracker and cancelling it?

jester77

ronan45 wrote: »

Never heard of a 20 year fixed, which bank is that? Also are you currently on a tracker and cancelling it?

It's with Deutsche Bank. I'm in Germany, only bought a house recently but I went with the fixed option. It will cost me more now but over the 20 years it might even out, but I don't have to worry about rates for the next 20 years. Trackers are good value now, but I think a long term fixed rate makes some sense.

makeorbrake

jester77 wrote: »

It's with Deutsche Bank. I'm in Germany....Trackers are good value now, but I think a long term fixed rate makes some sense.

Sure - they have these (long term fixed rate) products on the continent. However, they are not available on the irish market.


I've always thought that this is where fixed rates make sense. However, the implementation in Ireland is nonsensical. Fixed rate deals over just a few years really don't help anyone. Some people say that they choose this option as they like to know where they stand - but over such a short term, they really don't know where they stand! It's relatively easy for the banks to price such products in a way that they are not going to lose and at the end of this short period, the customer is left with exactly what they wanted to avoid i.e. uncertainty and possibly a financial shock as they then have to adjust to whatever the prevailing rates are at that time (regardless of whether they enter into another fixed rate or go with variable rate).

MMAGirl

jester77 wrote: »

If you fixed now for long term, you could win out. I am after fixing with my bank here for 20 years at 3.1%. ECB rates could stay below that over the 20 years and I might be losing out, but I have at least the peace of mind knowing that my mortgage repayments are not going to change for 20 years.

What if you wanted to pay down your mortgage early to save on interest

jester77

MMAGirl wrote: »

What if you wanted to pay down your mortgage early to save on interest

Would depend on the deal you sign. I can only pay down 10% of the mortgage per year (sondertilgung) on top of what I pay which would mean I wouldn't be able to pay it off for at least 9 or 10 years (if I was able to), but that suits me. If you want something more flexible then you would have a higher interest rate.

D3PO

jester77 wrote: »

If you fixed now for long term, you could win out. .

Theoretically yes you could but

A) Long term fixed rates don't exist in Ireland

Banks setting a 20 year rate are doing so with a certain level of statistical trending and analysis on where rates are likely to go. Clearly over the longer the term the harder it is for them to do, but they certainly add a buffer in to try and mitigate that. So whilst possible to come out on top low of averages says you wouldn't.

Sand Wedge

D3PO wrote: »

Theoretically yes you could but

A) Long term fixed rates don't exist in Ireland

Banks setting a 20 year rate are doing so with a certain level of statistical trending and analysis on where rates are likely to go. Clearly over the longer the term the harder it is for them to do, but they certainly add a buffer in to try and mitigate that. So whilst possible to come out on top low of averages says you wouldn't.

Would it not be that the banks are simply borrowing the money over 20 years themselves at a cheaper fixed rate than the 3.1% that they have offered. Rather than what happened here where the banks borrowed short term and lent it long term. If the bank can borrow over 20 years at a fixed rate of less than 3.1% and lend it over the same term at 3.1% the bank makes money and the cutomer gets a good fixed interest rate.

The banks here really need to start funding mortgages from long term borrowings matching the term that they are lending mortgages for.

roro2

Sand Wedge wrote: »

Would it not be that the banks are simply borrowing the money over 20 years themselves at a cheaper fixed rate than the 3.1% that they have offered.

That's the key point, they match their funding so it's not really about predicting where rates will go. Banks here have trouble funding at anything longer than a few years, and certainly not at such affordable rates. Banks' access to funding has improved in the last year or two and may continue to improve, but its just not feasible for them to offer such competitive long-term fixed rates at the moment.

D3PO

roro2 wrote: »

That's the key point, they match their funding so it's not really about predicting where rates will go. Banks here have trouble funding at anything longer than a few years, and certainly not at such affordable rates. Banks' access to funding has improved in the last year or two and may continue to improve, but its just not feasible for them to offer such competitive long-term fixed rates at the moment.

Who's funding banks with 20 year bonds at less than 3.1% (for them to offer a 20 year fixed at that rate they really need a bond at a max of 2.5%)

More likely they are using a strong deposit base with little interest being offered on such accounts to offer such a good fixed rate.

roro2

D3PO wrote: »

Who's funding banks with 20 year bonds at less than 3.1% (for them to offer a 20 year fixed at that rate they really need a bond at a max of 2.5%)

More likely they are using a strong deposit base with little interest being offered on such accounts to offer such a good fixed rate.

Strong banks in the core can issue long-term bonds at 2-3% but, as you say, stable deposits play an important role too as they can often be assumed to be long-term in nature even if they are contracted over much shorter terms, or are even demand deposits. The point being that banks that can offer long-term fixed rates don't carry the full interest rate risks from these mortgages - they match their funding through long-term liabilities (bonds and deposits) where possible and also use hedging to reduce the risks. These options are much more expensive for Irish banks.

Galwayguy35

BOI sent me a letter and rang as well asking would I change from the tracker but offered very little as an incentive to do so.

Maybe some people might take them up on the offer but I doubt it.

Pawwed Rig

Haha you can't blame them for chancing their arm.

Dear galwayguy35

Would you mind paying us more with no benefit to you?

Thanks in advance

Your friends at BOI

I suppose if they get 1 biter it justifies the cost of thousands of letters.

Sand Wedge

Pawwed Rig wrote: »

Haha you can't blame them for chancing their arm.

Dear galwayguy35

Would you mind paying us more with no benefit to you?

Thanks in advance

Your friends at BOI

I suppose if they get 1 biter it justifies the cost of thousands of letters.

I'd say they would get more than one. If you where looking to sell your house in the very near future, would you not take the write down in capital they where offering? You would make more of a profit or have less negative equity when you sell?

Example scenario:
Mortgage currently at 300k on tracker. I am looking to sell my house and move. The bank offers me 5% reduction in mortgage for changing to variable. i.e. 15k off my mortgage. My mortgage now down to 285k. When I sell house for 310k then I make 25k instead of 10k.

Pawwed Rig

Sand Wedge wrote: »

I'd say they would get more than one. If you where looking to sell your house in the very near future, would you not take the write down in capital they where offering?

That is a fair point but by the post I assumed they were not writing down any of the capital. I may have misinterpreted.

fleetfoot

Changing from a tracker mortgage i think depends on your age !
If say you are 60 years old and they offer 10k to change snatch there hand off,
(depending on mortgage of course )
Say you loan is down to 100k by this age must be close (sometimes )
Take the 10k and bugger off to greece for 6 months!
Only live once
Younger folk stick with the tracker at all costs nd dont give em an excuse (non payment ect )to take it off you !

charlesh

Galwayguy35 wrote: »

BOI sent me a letter and rang as well asking would I change from the tracker but offered very little as an incentive to do so.

Maybe some people might take them up on the offer but I doubt it.

come on GG35 - we ALL want to know .... what was the offer

if possible can you state your tracker , outstanding mortgage - and what the offer was.

not asking much am i?

there was an article in the SBP a couple of weeks ago - stating most trackers are worth between 20 and 30% of the mortgage.
IMO thats about fair.