Tracker mortgage writedown?

2rkehij30qtza5

Has anyone managed to get money written down if they pay off their tracker mortgage? My tracker is .75% so as close to free money as you can get. I am meeting the repayments and am not in arrears.

I need to sell the property, I will not be buying another property and I am in negative equity by about €20k on a €200k mortgage. I don't have savings to cover the €20k. I'd be happy if the bank would reduce the mortgage to €180k and I could sell it at that and be done with the tracker mortgage (bonus for them).

Has anyone had the experience of banks writing off the negative equity aspect when paying off a tracker? I can only see it as a win-win situation for both me and the bank? Thanks

Eldarion

Robert Small Smog wrote: »

Has anyone managed to get money written down if they pay off their tracker mortgage? My tracker is .75% so as close to free money as you can get. I am meeting the repayments and am not in arrears.

I need to sell the property, I will not be buying another property and I am in negative equity by about €20k on a €200k mortgage. I don't have savings to cover the €20k. I'd be happy if the bank would reduce the mortgage to €180k and I could sell it at that and be done with the tracker mortgage (bonus for them).

Has anyone had the experience of banks writing off the negative equity aspect when paying off a tracker? I can only see it as a win-win situation for both me and the bank? Thanks

Not personally mind you so this might be anecdotal, and slightly embellished, but I've had a number of friends who have been offered substantial writedowns to move off their trackers. Some claim to the tune of as much as €25-30k.

The way you want to play this is to approach the bank to strike the deal for the writedown, saying you've heard of this type of thing happening and if they would be interested in doing so in your case. I'd say they'll more than likely be on board.

Mention nothing about wishing to sell the place as it is irrelevant and will only serve to undermine your bargaining position. Best of luck!

2rkehij30qtza5

Thanks a million.
I will update this thread with how I get on. Might be a couple of weeks before I have any concrete news.

gaius c

Yes. Friends had a good chunk taken off their tracker for paying it off early.
You have to be fully paid up. If you're in arrears (or ever have been), it's not going to happen.

makeorbrake

gaius c wrote: »

Yes. Friends had a good chunk taken off their tracker for paying it off early.
You have to be fully paid up. If you're in arrears (or ever have been), it's not going to happen.

With which bank and when was this deal done exactly?

murphaph

gaius c wrote: »

You have to be fully paid up. If you're in arrears (or ever have been), it's not going to happen.

Anecdotally I've heard tge exact opposite, that banks won't do any deals with good payers and you need to be in arrears to have a chance.

gaius c

makeorbrake wrote: »

With which bank and when was this deal done exactly?

PTSB I think. Actually, another friend who has his mortgage with them has an offer from them in writing that he's holding onto until he gets his resources in place to be able to avail of it. Yes, they approached him first. First friend approached the bank first.

Both were/are in negative equity, first by a little bit. Second by a large amount.

murphaph wrote: »

Anecdotally I've heard tge exact opposite, that banks won't do any deals with good payers and you need to be in arrears to have a chance.

That doesn't really make sense. They lose enough money on trackers and lose even more when it's not being paid.
Are there other borrowings involved? Banks are losing money hand over fist with trackers but if there's another loan involved at a different rate, that could change the calculations. Or it could simply be a different bank.

I don't have a tracker mortgage but if I did and the bank refused my offer to play ball in return for me paying faster, I'd say "okay lads, I'll keep paying as per contract and keep you losing money for the full 35 years".

murphaph

I just don't believe it's true because I have a tracker at ECB + 0.75% and the bank would have written to me to make an offer if it was so clearly in their interests to do so. I believe the banks are hoping that interest rates will climb to a point where they are not making losses on trackers.

I do believe deals are being done but I only believe it's among a select cohort and does not include people like me with no negative equity and no arrears. You mentioned both your friends being in negative equity...that's interesting and might be why they have received offers, though if they are not in arrears and aren#t in serious NE then it seems strange to me.

If a bank does a deal on a tracker it crystalises its loss now. If they get the rub of the green and interest rates rise sufficiently then they may not make a loss. They will presumably have actuaries crunching the numbers but ultimately its a guess as to how interest rates will behave and nobody can predict that.

makeorbrake

I can only assume that it was the original PTSB deal from a couple of years back. They were the only ones to offer such a deal (and the deal didn't really measure up to the value of the tracker).

I was gagging for this type of deal over the last couple of years - but by all accounts it won't be coming. I have come to the conclusion in any event that any 'deal' would never equal the value of my ecb+ 0.59% tracker. It's the cheapest finance I'll ever see - and I'm going to pay it back on the drip (even though I could pay it all off tomorrow).

cerastes

murphaph wrote: »

Anecdotally I've heard tge exact opposite, that banks won't do any deals with good payers and you need to be in arrears to have a chance.

Im inclined to agree with this, what reason does a bank have to make an offer to a paying customer not in arrears, when the bank may hold onto them until they make a profit or break even.
On the other hand, a person in arrears for whatever reason, who might have cash or access to cash isnt as sure a bet and seems more likely to be let off the hook as they are such a poor performance, ie they cant even manage a tracker, it might get worse if rates increase. Better to get rid of the tracker from the banks point of view and offer a writeoff of some description and get whatever cash they can now.
There was talk of banks at one point offering writedowns, but what was being put out was paltry compared to what I read was being offered in the UK on similar products.
http://www.independent.ie/business/personal-finance/louise-mcbride-only-give-up-your-tracker-if-you-get-a-big-writedown-29210694.html
A 25-30% minimum would make it worthwhile, more paltry offers are to encourage people, Ive no doubt they will try trick or persuade people into giving them up, hopefully everyone knows what a tracker is worth.

gaius c

murphaph wrote: »

I just don't believe it's true because I have a tracker at ECB + 0.75% and the bank would have written to me to make an offer if it was so clearly in their interests to do so. I believe the banks are hoping that interest rates will climb to a point where they are not making losses on trackers.

PPR or BTL?

I do believe deals are being done but I only believe it's among a select cohort and does not include people like me with no negative equity and no arrears. You mentioned both your friends being in negative equity...that's interesting and might be why they have received offers, though if they are not in arrears and aren#t in serious NE then it seems strange to me.

Remember that one of the pair had to go look for a deal (+had resources to clear the NE in one fell swoop) and after checking I discovered that the other also asked in a roundabout way (looking for a mortgage on a new property and inquiring if they could keep a portion on a tracker with the rest on SVR and the bank responded, no - pay it off completely and raise a fresh mortgage on an SVR). Whether the property is in negative equity or not makes no difference to whether the bank are losing money on the tracker. What matters is the minus margin on their books. I very much doubt that banks would be giving customers incentives to make loss-making trackers perform even worse on their books.

If a bank does a deal on a tracker it crystalises its loss now. If they get the rub of the green and interest rates rise sufficiently then they may not make a loss. They will presumably have actuaries crunching the numbers but ultimately its a guess as to how interest rates will behave and nobody can predict that.

No, the banks actually always made a loss on trackers. The idea was that they would be loss leaders for more profitable lending such as car loans and house improvement loans. They got away with it and mitigated the loss for a short while because other banks were shoveling money down their throats. It'll be a long long time before that happens again.

ronan45

I believe the banks are hoping that interest rates will climb to a point where they are not making losses on trackers.
If Interest Rates rise sufficiently then they may not make a loss.

(What would the ECB Rate have to Climb to for Trackers to become Profitable for the banks?)

So basically these trackers might be worthless in say 5 years if the ECB Jacks up, if so then does that mean that trackers might not be the cheapest option over the life of the mortgage

makeorbrake

ronan45 wrote: »

So basically these trackers might be worthless in say 5 years if the ECB Jacks up, if so then does that mean that trackers might not be the cheapest option over the life of the mortgage

By all accounts, its interbank euribor rates that are relevant to banks - and not the ecb rate per se. on that basis, it seems the cost of capital over the last couple of years has been lower for them.


Celtic Tiger era trackers will always be by far and away the cheapest credit available. Fixed rates here - unlike the continent - are offered half heartedly - and never truly long term. Irish banks well and truly hedge their bets on fixed... so they never result in value.

cerastes

ronan45 wrote: »

I believe the banks are hoping that interest rates will climb to a point where they are not making losses on trackers.
If Interest Rates rise sufficiently then they may not make a loss.

(What would the ECB Rate have to Climb to for Trackers to become Profitable for the banks?)

So basically these trackers might be worthless in say 5 years if the ECB Jacks up, if so then does that mean that trackers might not be the cheapest option over the life of the mortgage

Is it really that banks are making a loss on trackers at all, they are after all lending at the ECB rate (correct me if Im wrong, but isnt that the rate at which they get the money at?) which they then add the rate that is tracking the ECB, so is it that they are losing money or it is just not as profitable as the gouging they manage on SVR's , car loans, credit cards and personal loans?
They may not be as profitable as these products, but if they are being repaid, is this some mantra they are spinning to show how bad off they are?
The banks sold these products, they were in league with all the other elements that hyped up the market and fed it.
They are now crying and poor mouthing for years, we even now have politicians wading in saying why banks should have some control or say over trackers, for a tracker to be given up now or anytime in the future really needs to be evaluated by the people that have them.
The writedown values that Ive heard are paltry, any writedown would need to approach or even exceed the value of any interest earned on that capital over time held by a person or family, they will likely be better off paying the tracker and keeping the capital as they may need it, paying off the debt for a paltry offering or even none, might see them with no or less debt, but they may not be able to access credit to that value or even a fraction of it, where they'd have to go begging the bank for a loan and follow strict criteria for getting one.
The banks should be realising any loss they claim they are suffering over time should be offered as value to the customer, instead they are offering nothing. They want the best of all worlds. They are no different to when they helped create the problem, because they are the same, for the greater part no mass sackings of the decision makers.

Until significant offerings are made, cant see how they could expect people will even consider opting or buying out of a tracker.

makeorbrake

cerastes wrote: »

Is it really that banks are making a loss on trackers at all, they are after all lending at the ECB rate (correct me if Im wrong, but isnt that the rate at which they get the money at?)

They borrow at euribor rates. By all accounts - when taken on average - these trackers are not so loss making as everyone first thought.

cerastes

makeorbrake wrote: »

They borrow at euribor rates. By all accounts - when taken on average - these trackers are not so loss making as everyone first thought.

Euribor rates?
I think Ive heard of it, any info on the not so loss making bit?
I did consider this myself, that they may really be in profit and all the talk is to allow them to gouge at the more extortionate rates they charge for other loan types.
On top of that, regarding SVR's and fixed rates, Ive recently read we can get nothing like the value thats available in France or Germany on rates, in particular longterm fixed rates. Here its the exact opposite, you get charged excessive amounts for longterm but there, Ive read somewhere only recently that they can get rates down around the 2 percents for such a loan.

Eldarion

makeorbrake wrote: »

They borrow at euribor rates. By all accounts - when taken on average - these trackers are not so loss making as everyone first thought.

Except it's not as simple as saying "Bank borrows at 1% and lend out at 1.75%. Easy profit." Banks have operating costs...

cerastes

Eldarion wrote: »

Except it's not as simple as saying "Bank borrows at 1% and lend out at 1.75%. Easy profit." Banks have operating costs...

This is true, but what are they doing about their operating costs, I have still heard of bonus culture and high pay among the decision makers while the frontline staff and thus the customers take the hit.
They led themselves to this situation they are in and helped if not were among those that pushed all of us where we are now.

I see no reason why people should just hand over trackers in exchange for nothing or very little in return to help the banks bottom line, they got the hand out, people arent, and anyone that has a tracker means it is either one of the few benefits or helping or helped them stay afloat this far.

gaius c

cerastes wrote: »

Is it really that banks are making a loss on trackers at all, they are after all lending at the ECB rate (correct me if Im wrong, but isnt that the rate at which they get the money at?) which they then add the rate that is tracking the ECB, so is it that they are losing money or it is just not as profitable as the gouging they manage on SVR's , car loans, credit cards and personal loans?
They may not be as profitable as these products, but if they are being repaid, is this some mantra they are spinning to show how bad off they are?
The banks sold these products, they were in league with all the other elements that hyped up the market and fed it.
They are now crying and poor mouthing for years, we even now have politicians wading in saying why banks should have some control or say over trackers, for a tracker to be given up now or anytime in the future really needs to be evaluated by the people that have them.
The writedown values that Ive heard are paltry, any writedown would need to approach or even exceed the value of any interest earned on that capital over time held by a person or family, they will likely be better off paying the tracker and keeping the capital as they may need it, paying off the debt for a paltry offering or even none, might see them with no or less debt, but they may not be able to access credit to that value or even a fraction of it, where they'd have to go begging the bank for a loan and follow strict criteria for getting one.
The banks should be realising any loss they claim they are suffering over time should be offered as value to the customer, instead they are offering nothing. They want the best of all worlds. They are no different to when they helped create the problem, because they are the same, for the greater part no mass sackings of the decision makers.

Until significant offerings are made, cant see how they could expect people will even consider opting or buying out of a tracker.

I think you're a little bit naive re how banks work. They have expenses and business overheads to cover on the margin between what they lend long-term and what they borrow short-term (to finance that long-term lending).

The old saying was "3:6:3" as in "borrow at 3%, lend at 6% and be on the golf course by 3". Even with such margins, banks were stolid and dependable earners, far from the flash casinos that they became during the 00's.

makeorbrake

Eldarion wrote: »

Except it's not as simple as saying "Bank borrows at 1% and lend out at 1.75%. Easy profit." Banks have operating costs...

Yes, I accept that completely. I don't claim to understand it fully but my understanding is that at the beginning of the credit crunch, banks were paying over the odds for capital. over the last couple of years, the ecb has seen to it that cheap credit is available to them. of course, that scenario may change again, but right now, trackers are not that much of a drag.


In any event - I'd suggest to folks not to entertain any such deal in the unlikely event that it comes around - as it's unlikely to equal the actual value of your tracker. Instead, put your savings to work elsewhere.

cerastes

gaius c wrote: »

I think you're a little bit naive re how banks work. They have expenses and business overheads to cover on the margin between what they lend long-term and what they borrow short-term (to finance that long-term lending).

The old saying was "3:6:3" as in "borrow at 3%, lend at 6% and be on the golf course by 3". Even with such margins, banks were stolid and dependable earners, far from the flash casinos that they became during the 00's.

So, you're saying they cant get to the golf course by 3 anymore? how awful for them. Lets have a whip around for them, someone put a hat out and see how many trackers you can collect.

As I said, I understand they have costs, but its not like, people went in armed and made them sell trackers under duress.
Do you have anything that actually shows trackers aren't profitable or is it they just arent as profitable as banks are used to?

I suspect they arent, or its very close so there is no profit and maybe no or not much loss if the loans are being paid, but thats the same if any loan isnt being paid. Is it just another line and excuse to then gouge those with SVR's anyway though? maybe pit people against each other, try influence political decision making.

Crimsonforce

I'm in a similar situation.

I am with Bank of Scotland. I have a tracker of lower .75% or lower i believe.
Current mortgage is 13 years left.

I moved from EBS to BOS early 2008 so just made it. they cut 6 years off the mortgage!

Roughly 110k left to pay.
I have never missed a repayment

I have the funds to pay off. has anyone heard of BOS offering deals? I thought (my own opinion) they would be happy to rid there books of the irish debt in order to clean up their own books..

tigershould

just on the point re: are banks making profit on trackers...

their results would suggest they are not.
BOI results last 2 years
2012 = 1.26B loss
2013 = 503m loss

http://www.rte.ie/news/business/2013/0802/465993-bank-of-ireland-results/

smcgiff

Crimsonforce wrote: »

I'm in a similar situation.

I am with Bank of Scotland. I have a tracker of lower .75% or lower i believe.
Current mortgage is 13 years left.

I moved from EBS to BOS early 2008 so just made it. they cut 6 years off the mortgage!

Roughly 110k left to pay.
I have never missed a repayment

I have the funds to pay off. has anyone heard of BOS offering deals? I thought (my own opinion) they would be happy to rid there books of the irish debt in order to clean up their own books..

BOSI sold some of their non performing assets and want to exit Ireland. I'd say you'd have a good chance of a deal.

Quin_Dub

Crimsonforce wrote: »

I'm in a similar situation.

I am with Bank of Scotland. I have a tracker of lower .75% or lower i believe.
Current mortgage is 13 years left.

I moved from EBS to BOS early 2008 so just made it. they cut 6 years off the mortgage!

Roughly 110k left to pay.
I have never missed a repayment

I have the funds to pay off. has anyone heard of BOS offering deals? I thought (my own opinion) they would be happy to rid there books of the irish debt in order to clean up their own books..

They would want to be offering a significant write-down for it to be profitable for you.

In various articles written by economists etc. I have seen them suggesting anything from 30%-40% as being the sort of discount required for the customer to be coming out on top.

If you have the funds available to clear it , they are likely making more money that the interest you are paying on the mortgage..

Depends on your specific needs , but personally (I have a tracker too) I'd be looking for them to accept something in the 70k-80k range as the final pay-out on a 110k mortgage..

dubrov

gaius c wrote: »

PPR or BTL?

No, the banks actually always made a loss on trackers. The idea was that they would be loss leaders for more profitable lending such as car loans and house improvement loans. They got away with it and mitigated the loss for a short while because other banks were shoveling money down their throats. It'll be a long long time before that happens again.

I don't know where you got that idea from. It would be crazy business to make a loss on huge loans to try and attract a profit on small loans.

Banks only source a portion of their funding from the ECB. Two of the other main sources are deposits and interbank lending, the latter of which has still not recovered from the boom. I can assure you that no Irish bank can borrow on the interbank market at anything close to ECB rates.

Trackers were introduced during the boom as Irish bank funding rates were more or less tracking the ECB rate. The assumption was that this would remain so.

gaius c

cerastes wrote: »

So, you're saying they cant get to the golf course by 3 anymore? how awful for them. Lets have a whip around for them, someone put a hat out and see how many trackers you can collect.

As I said, I understand they have costs, but its not like, people went in armed and made them sell trackers under duress.
Do you have anything that actually shows trackers aren't profitable or is it they just arent as profitable as banks are used to?

I suspect they arent, or its very close so there is no profit and maybe no or not much loss if the loans are being paid, but thats the same if any loan isnt being paid. Is it just another line and excuse to then gouge those with SVR's anyway though? maybe pit people against each other, try influence political decision making.

I have no idea what point you are trying to make.

gaius c

dubrov wrote: »

I don't know where you got that idea from. It would be crazy business to make a loss on huge loans to try and attract a profit on small loans.

Banks only source a portion of their funding from the ECB. Two of the other main sources are deposits and interbank lending, the latter of which has still not recovered from the boom. I can assure you that no Irish bank can borrow on the interbank market at anything close to ECB rates.

Trackers were introduced during the boom as Irish bank funding rates were more or less tracking the ECB rate. The assumption was that this would remain so.

You don't say!
The banks entered into a version of MAD to ensure that they didn't lose business to other banks. In the spirally bubbly world of 2005, some fella did calculations that based on the bubblicious world of the time that hooking a customer with a low margin tracker would keep them coming back for car, house improvement, equity release loans, etc and that they'd have enough volume on those loans to cover the trackers.

makeorbrake

gaius c wrote: »

You don't say!
The banks entered into a version of MAD to ensure that they didn't lose business to other banks. In the spirally bubbly world of 2005, some fella did calculations that based on the bubblicious world of the time that hooking a customer with a low margin tracker would keep them coming back for car, house improvement, equity release loans, etc and that they'd have enough volume on those loans to cover the trackers.

Together with the fact that front line staff were picking up bonuses for selling these products.

Quin_Dub

makeorbrake wrote: »

Together with the fact that front line staff were picking up bonuses for selling these products.

Certainly part of it - Sales staff were getting bonus payments based on the volume of money they loaned , not the profits.

Utterly crazy practices.....

gaius c

Quin_Dub wrote: »

They would want to be offering a significant write-down for it to be profitable for you.

In various articles written by economists etc. I have seen them suggesting anything from 30%-40% as being the sort of discount required for the customer to be coming out on top.

If you have the funds available to clear it , they are likely making more money that the interest you are paying on the mortgage..

Depends on your specific needs , but personally (I have a tracker too) I'd be looking for them to accept something in the 70k-80k range as the final pay-out on a 110k mortgage..

That's the wrong way to look at it. They are under no obligation to offer you anything and if they want to carry on losing money on your mortgage, that's their call. Too many people seem to have the attitude of "just give me a discount of my choosing now" when the better approach is to ask nicely for the discount and once you have that answer in the affirmative, it's just a business negotiation.

Like any business negotiation, you won't get everything you want so if you work out that the bank will lose €100k over the lifetime of the tracker, you can't just demand a €100k discount in return for paying it back early and expect to be taken seriously because in order to get that future €100k loss off their books, they'll have to take a short term hit in one go.

makeorbrake

gaius c wrote: »

.. you won't get everything you want so if you work out that the bank will lose €100k over the lifetime of the tracker, you can't just demand a €100k discount in return for paying it back early and expect to be taken seriously because in order to get that future €100k loss off their books, they'll have to take a short term hit in one go.

Yeah, and that's exactly the reason why people should hold on to their trackers regardless of any potential deal - as any such deal will come up short of its true value.

cerastes

gaius c wrote: »

That's the wrong way to look at it. They are under no obligation to offer you anything and if they want to carry on losing money on your mortgage, that's their call. Too many people seem to have the attitude of "just give me a discount of my choosing now" when the better approach is to ask nicely for the discount and once you have that answer in the affirmative, it's just a business negotiation.

Like any business negotiation, you won't get everything you want so if you work out that the bank will lose €100k over the lifetime of the tracker, you can't just demand a €100k discount in return for paying it back early and expect to be taken seriously because in order to get that future €100k loss off their books, they'll have to take a short term hit in one go.

But the banks arent prepared to meet anyone even halfway, they offer either no or a paltry amount regarding writedowns, or simply try persuade the customer against their best interest to change, they will rather cut off their nose to spite their face than have something or even most of it now rather than make a reasonable offer. They are probably waiting incase they might write it off themselves at a better value later maybe if people are worse off.

If they arent meeting customers halfway, not anywhere near it, they should stop protesting and complaining about it, they may or may not be profitable but it is of their own doing and at the same time try justify crucifying SVR holders.

Crimsonforce

Quin_Dub wrote: »

They would want to be offering a significant write-down for it to be profitable for you.

In various articles written by economists etc. I have seen them suggesting anything from 30%-40% as being the sort of discount required for the customer to be coming out on top.

If you have the funds available to clear it , they are likely making more money that the interest you are paying on the mortgage..

Depends on your specific needs , but personally (I have a tracker too) I'd be looking for them to accept something in the 70k-80k range as the final pay-out on a 110k mortgage..

How do you think I should approach and engage the bank or i believe it is a company called certus who are now running the assets on behalf of BOSI
should I call or formally write to them..

Quin_Dub

gaius c wrote: »

That's the wrong way to look at it. They are under no obligation to offer you anything and if they want to carry on losing money on your mortgage, that's their call. Too many people seem to have the attitude of "just give me a discount of my choosing now" when the better approach is to ask nicely for the discount and once you have that answer in the affirmative, it's just a business negotiation.

Like any business negotiation, you won't get everything you want so if you work out that the bank will lose €100k over the lifetime of the tracker, you can't just demand a €100k discount in return for paying it back early and expect to be taken seriously because in order to get that future €100k loss off their books, they'll have to take a short term hit in one go.

I agree - Using "offering" above was perhaps a poor choice of wording in the context

My point was that when you are negotiating and doing the necessary dance with them the 30%+ figure should be one that you hold on to and I would if the negotiations weren't getting into that Ball-park I'd be walking away..