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

steve9859 · 01-04-2011 10:14AM

halkar wrote: »

German inflation was at 2.8% back in October 2008. Ecb rate was cut to 3.75 % that month. Oil was around 70$ and still going down. Dollar to Euro was at average 1.32 at the same time.

If we look at the data for today. German inflation is at 2.1% . Ecb rate is at 1% . Oil above 100$ and Dollar to Euro is over 1.40. Today's argument is inflation is being pushed up due high cost of energy prices and ME problems bla bla (they dont say they taxed the a$$ of petrol:D). Inflation was higher while energy prices were almost half of today back in 2008. I am no economist but numbers doesn't add up here.

Increasing interest rate will probably push Euro further against dollar and hurt Germany's exports as well as other eurozone countries. They can then say good bye to German growth. I don't think that is what the zee Germans want

I think central banks all over the world now trapped and we will see low interest rates for a long time.

German inflation is 2.8% now as well, with Eurozone inflation up to 2.6%, but the difference compared to 2008 is that the banking system is awash with cash, and growth prospects are strong. German growth this year is expected to be as much as 3%, and the jobless rate has fallen to 7% - that kind of growth is incompatible with an interest rate of 1%, especially with the high energy prices and the liquidity in the banking system which, when deployed, could lead to an uncontrollable inflation spike if a lid is not put on it now. The background economic environment is very different to 2008 when a certain amount of above target inflation was accepted as economic growth forecasts were so poor.

USD weakness is an irrelevance for the ECB. Now that growth in the major European economies is on a strong footing, inflation is the only thing that matters

leeroybrown · 01-04-2011 12:46PM

Merch wrote: »

Also, how would the ECB rate increasing benefit a bank, they'd still only get their .5 - 1.5% above the rate anyway?

Currently our banks can't borrow at the ECB rate. The standard borrowing mechanisms are closed to them and the funding they're using to maintain liquidity are far more expensive. A 0.5% increase in the ECB rate (so long as their other funding costs didn't increase the same amount) would effectively mean an increase in the bank's income from the loan (and a reduction in its loss) in this situation.

Panrich · 01-04-2011 04:30PM

leeroybrown wrote: »

Currently our banks can't borrow at the ECB rate. The standard borrowing mechanisms are closed to them and the funding they're using to maintain liquidity are far more expensive. A 0.5% increase in the ECB rate (so long as their other funding costs didn't increase the same amount) would effectively mean an increase in the bank's income from the loan (and a reduction in its loss) in this situation.

I would suspect that anyone lending to an irish bank is setting the rate at ECB + x% where x is the risk for irish banks. In this case, a raise in the ECB rate does nothing to bridge the gap.

leeroybrown · 01-04-2011 04:45PM

Panrich wrote: »

I would suspect that anyone lending to an irish bank is setting the rate at ECB + x% where x is the risk for irish banks. In this case, a raise in the ECB rate does nothing to bridge the gap.

Agreed but given that the Irish banks can't raise liquidity to lend and are being actively downsized the benefit from taking in a greater return on 400,000 tracker mortgages will definitely outweigh the downside of the borrowing at a higher rate to lend on far less capital.

Gumbo · 01-04-2011 05:10PM

Merch wrote: »

I read an article recently that said UK banks were offering their customers sizeable reductions in their balance to swap from tracker mortgages, obviously the amount would need to offset the incresed rates people might suffer, is that likely to be a thing here? or are the banks just holding off on that altogether here?

The banks? which ones?

Also, how would the ECB rate increasing benefit a bank, they'd still only get their .5 - 1.5% above the rate anyway?

My brother has his mortgage with Bank Of Scotland Ireland, and they have written to him offering a reduction in his loan to opt out of the tracker. i'll ask him the exact figure later.

funny enough, im also with BOSI, but they havent wrote to me at all.

Both of us on trackers.

dan_d · 01-04-2011 05:27PM

Hmm.....us too, and we haven't got anything either.
I'll opt out if they give me 5% or less rate fixed for the next 10 years, minimum.
Otherwise, nope!

theofficepest2 · 01-04-2011 05:50PM

mirwillbeback wrote: »

I don't know what a tracker mortgage is?

Oy!! stop plagerising my plagerism :pac: ourp

jamesbrond · 01-04-2011 09:18PM

dan_d wrote: »

Hmm.....us too, and we haven't got anything either.
I'll opt out if they give me 5% or less rate fixed for the next 10 years, minimum.
Otherwise, nope!

That would actually cost you a fortune.
Check it out here
http://www.drcalculator.com/mortgage/ie/

Remember that the bank wont offer you anything that isnt in their favor.

Gumbo · 01-04-2011 09:19PM

dan_d wrote: »

Hmm.....us too, and we haven't got anything either.
I'll opt out if they give me 5% or less rate fixed for the next 10 years, minimum.
Otherwise, nope!

they would want to be righting off a large portion of your mortgage too.

hmmm · 01-04-2011 09:22PM

Right now a tracker mortgage is a steal, you'll make more money if you invest your money rather than paying off your mortgage early.

However as rates start to rise, there will probably come a time where people with cash on hand will be better off putting that money against their mortgage rather than into investments.

So....there's no hard and fast rule, I wouldn't automatically assume that it will always be a good idea to hold onto your tracker.

whackball · 01-04-2011 09:29PM

hmmm wrote: »

People on variable rates are not subsidising tracker mortgages, they are subsidising the incompetent government decision to guarantee bank debt. If the banks had been allowed go bust, the tracker mortgages would have remained as they are and the bondholders would have picked up the bill. As it is, the government stepped in and are now getting the variable rateholders to subsidise their life support for the banks.

Nail, head, hit....

I really feel for thoses on variable and even fixed rates. Morgatages aside we have been ultimately fooked over in every way possible and will continue to be, but what can/do we do.

As I said earlier, I've a tracker but what use is it to me if I lose my job.

dan_d · 01-04-2011 10:43PM

jamesbrond wrote: »

That would actually cost you a fortune.
Check it out here
http://www.drcalculator.com/mortgage/ie/

Remember that the bank wont offer you anything that isnt in their favor.

I do know that! I picked that number out of the air...mostly coz the other banks interest rates are just going to keep going way up, so in 2 yrs time, 5 percent will probably be quite good. Plus a write-off on the mortgage amount aswell.
I know it's not going to happen anyway. I'll be keeping my tracker.

screamer · 01-04-2011 11:24PM

Tracker mortgage = bank losing money = bad debts = more handouts needed from Irish state = tax payers footing shortfall in tracker rate mortgages.

At the end of the day, the tax payer will foot the bill for it..... so it's only swings and roundabouts. I think that the introduction of an admin charge on tracker mortgages like BOI has done for current accounts is one way the banks can reduce the defecit on such loans, I think one thing everyone who has a variable mortgage should try and do, is pay it off as quickly as possible, with interest on deposits pathetically low, and mortgage rates set to rise, it makes sense.

Godge · 01-04-2011 11:40PM

screamer wrote: »

Tracker mortgage = bank losing money = bad debts = more handouts needed from Irish state = tax payers footing shortfall in tracker rate mortgages.

At the end of the day, the tax payer will foot the bill for it..... so it's only swings and roundabouts. I think that the introduction of an admin charge on tracker mortgages like BOI has done for current accounts is one way the banks can reduce the defecit on such loans, I think one thing everyone who has a variable mortgage should try and do, is pay it off as quickly as possible, with interest on deposits pathetically low, and mortgage rates set to rise, it makes sense.

Thank God those of us with tracker mortgages with foreign-owned banks (which incidentally haven't gone bust, strange that) are safe from nutty ideas like that.

Godge · 01-04-2011 11:43PM

hmmm wrote: »

Right now a tracker mortgage is a steal, you'll make more money if you invest your money rather than paying off your mortgage early.

However as rates start to rise, there will probably come a time where people with cash on hand will be better off putting that money against their mortgage rather than into investments.

So....there's no hard and fast rule, I wouldn't automatically assume that it will always be a good idea to hold onto your tracker.

Absolutely, as I have pointed out elsewhere, the risk of hyperinflation is not negligible. In such a case, while variable rate mortgages would be spared the hit as rates are reviewed on a monthly basis, the tracker mortgages would suffer as they went up weekly or even daily. While this is an unlikely scenario, given the German fear of inflation, it shows that no decision is without risk and why should those who read the market correctly and picked the right option have to pay?

That is the complete opposite of capitalism. Sometimes it seems to me that Irish people want the upside of capitalism only.

screamer · 01-04-2011 11:44PM

Godge wrote: »

Thank God those of us with tracker mortgages with foreign-owned banks (which incidentally haven't gone bust, strange that) are safe from nutty ideas like that.

It's not a nutty idea if the banks can actually MAKE some money out of it. Remember, nothing is safe where banks are concerned, as another poster said, they'd take the food out of our children's mouths if they could......

Godge · 01-04-2011 11:56PM

screamer wrote: »

It's not a nutty idea if the banks can actually MAKE some money out of it. Remember, nothing is safe where banks are concerned, as another poster said, they'd take the food out of our children's mouths if they could......

Look, this thread has been going nowhere for weeks.

As I pointed out some time ago, there is a contract between borrower and lender that cannot be broken by Government edict.

kippy · 01-04-2011 11:59PM

As someone said above, it's essentially swings and roundabouts.
Do people think that tracker mortgage holders are excluded from paying the costs associated with the bailout of Irish banks to the state?
Tracker mortgage holders took a risk when they got their mortgages and to be fair that mortgage rate could and will go up and down (No lower than it is now) over the term of the loan which could range anywhere from 1-35 odd years.
These people are still paying the costs that almost everyone is to support the Irish banking sector - they may be "gaining" with a cheaper mortgage but they are paying their share into the "recovery" fund for the country.

It's also a bit of a mis-homer to call a tracker mortgage a "bad" debt as one or two posters have. Bad debts tend never to be repaid and the bank end up taking a massive "haircut" on the loan - thats not what a tracker mortgage is.

Raskolnikov · 02-04-2011 12:09AM

People are looking at this all wrong. People should be asking themselves; why are we subsidising a private institution which ran itself into the ground because of all the rubbish loans that they made?

Tayla · 02-04-2011 01:19AM

As a person with a variable can I just say I am delighted we have so many people on tracker mortgages.

When you look at the sheer amount of unpayable impossible debt that has been lumbered on us and the poverty in which the government will expect its citizens to live with cuts and levies and property/water tax then I for 1 am very happy that there are 400k households in this country where those people can hopefully have a decent standard of living.

eamo12 · 02-04-2011 02:15PM

jjmcclure wrote: »

It's simple Eamo. You should have got a TRACKER!!

Would you consider those who bet on a loosing horse as subsidising the winners? You make your choices and live with them. A contract is a contract is a contract....

PS.
I LOVE MY TRACKER!!!

Jim, guess what? Your post was read out on the 'Last Word' on thursday as an example of the arrogance of some of the ppl who hold trackers!! true! Cheers mate

leeroybrown · 02-04-2011 03:31PM

screamer wrote: »

At the end of the day, the tax payer will foot the bill for it..... so it's only swings and roundabouts. I think that the introduction of an admin charge on tracker mortgages like BOI has done for current accounts is one way the banks can reduce the defecit on such loans, I think one thing everyone who has a variable mortgage should try and do, is pay it off as quickly as possible, with interest on deposits pathetically low, and mortgage rates set to rise, it makes sense.

An admin charge like that wouldn't stand up to legal challenge. In the current account situation the bank is providing a service which doesn't involve a binding contract and from which either party can exit at any time. The tracker mortgage is based on a strong legally binding contract that will prevent the bank from taking actions against the holder, and rightly so. The government would run into serious legal issues if they tried to impose some form of tax/levy too as they'd be penalising one variable rate customer and not another.

What I find comical in this situation is that one group of ordinary hardworking people (variable rate holders) are attacking another group of ordinary hardworking people (tracker holders) because they happen to have a better deal right now. Every single one of these ordinary people will subsidising the banking sector for years from their pockets through taxation. There are plenty of people who deserve criticism but picking the one group who are in almost the same situation is not them!

acerelic · 02-04-2011 03:41PM

danbohan wrote: »

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

The above should have been the end of this thread really.
If we could all go back in time we'd have all bought houses just before the boom on tracker mortgages and have thought ourselves very clever for having more forsight then anybody who hadn't done likewise.
People need to ask themselves the following when buying a property -
1. Do I think this property is good value?
2. Can I afford the mortgage at the current rate of interest?
3. Do I have a buffer if variables, i.e. (not unforeseeable)interest rate increases, were to kick in?
If you can answer yes to all of the above you should buy. If your answers would be no I would ask why would you want to buy?
Stop worrying about what others are paying and worry about what your paying.
Might I quickly add that I am not on a tracker but have friends who are and I don't begrudge them in the slightest.

Leprechaun77 · 02-04-2011 04:13PM

I recall taking out my mortgage several years ago. I was given the three options of:

Standard variable
Tracker variable
Fixed (1,2,3,5,10 years)

At the time I chose the tracker rate as it was guaranteed to stay within a fixed limit of the ECB rate, and therefore I would not be at the whim of an individual bank increasing their variable. What some people neglect to mention is that many who took out standard variables paid a lower rate to the comparable tracker rate. This was the first part of the 'risk' premium I initially paid for what I deemed a better contract. Secondly, many people who chose standard variables also got these introductory discounted interest rates for 1-2 years, where they paid far less. I recall friends with similar mortgages paying hundreds per month less than me at the time, and questioning my decision to go with a tracker. I chose not to take lower repayments for the first year or two and looked long term.

I do have some sympathy for those that are now on standard variable because of the extreme circumstances that have prevailed. I would certainly not call them stupid, as some previous posters have...some may have been greedy, but most unlucky. I think the government should have made legal stipulations to the banks in relation to such rate increases after the bailout, rather than the usual verbal agreement over the phone.

danbohan · 02-04-2011 04:26PM

acerelic wrote: »

The above should have been the end of this thread really.
If we could all go back in time we'd have all bought houses just before the boom on tracker mortgages and have thought ourselves very clever for having more forsight then anybody who hadn't done likewise.
People need to ask themselves the following when buying a property -
1. Do I think this property is good value?
2. Can I afford the mortgage at the current rate of interest?
3. Do I have a buffer if variables, i.e. (not unforeseeable)interest rate increases, were to kick in?
If you can answer yes to all of the above you should buy. If your answers would be no I would ask why would you want to buy?
Stop worrying about what others are paying and worry about what your paying.
Might I quickly add that I am not on a tracker but have friends who are and I don't begrudge them in the slightest.

actually i dont have a mortgage at all , thankfully , i just wanted to point out to the op and anybody else that begrudges the tracker people to wise up , i even heard ivan yates slate them on newstalk this week, sounds like a drowning man wanting to bring his friends down with him to me . people in this country who bought in last 6-8 years have huge problems with negative equity etc etc , many on trackers have greatly reduced circumstances and are at best just hanging on , they are not the enemy. to the anti tracker brigade , find other more worthy targets to concentrate your ire on ,and as a country we have many

dan_d · 02-04-2011 04:42PM

Leprechaun77 wrote: »

I recall taking out my mortgage several years ago. I was given the three options of:

Standard variable
Tracker variable
Fixed (1,2,3,5,10 years)

At the time I chose the tracker rate as it was guaranteed to stay within a fixed limit of the ECB rate, and therefore I would not be at the whim of an individual bank increasing their variable. What some people neglect to mention is that many who took out standard variables paid a lower rate to the comparable tracker rate. This was the first part of the 'risk' premium I initially paid for what I deemed a better contract. Secondly, many people who chose standard variables also got these introductory discounted interest rates for 1-2 years, where they paid far less. I recall friends with similar mortgages paying hundreds per month less than me at the time, and questioning my decision to go with a tracker. I chose not to take lower repayments for the first year or two and looked long term.

I do have some sympathy for those that are now on standard variable because of the extreme circumstances that have prevailed. I would certainly not call them stupid, as some previous posters have...some may have been greedy, but most unlucky. I think the government should have made legal stipulations to the banks in relation to such rate increases after the bailout, rather than the usual verbal agreement over the phone.

+1.
Our initial rate was 5.05%. Huge, compared to the 3% variable rates that were going around at the time. But we looked long and hard at the situation and decided something similar.....we didn't want to be at the whim of an individual bank and it's rates, and we had absolutely zero interest in interest-only repayments/discounted repayments for a year or two....felt they were a waste of time and money in the long run, we just instantly wanted to start knocking money off the capital.
My personal way of looking at it was that I was going to be stuck with this for the next 30 years, and I don't trust banks. They collapse. It has happened, repeatedly. Maybe not in my time, but it's happened, and so , can happen again. Therefore being at the whim of one single bank for the next 30 years did not appeal to me. The ECB is affected by a lot more factors, causing it to consider it's judgement more carefully when making decisions on rates. It seemed sensible to me at the time to go for the tracker, as the ECB was less likely to be jumping up and down depending on the economy.I had nothing to base that on, only gut instinct. I did not expect that it would go down, and so quickly, that's been a bonus. But equally, I've no doubt it will start to rise.
As someone pointed out several posts ago, this thread is going nowhere. All mortgage holders signed a contract with a bank. ALL taxpayers in Ireland, both now and into the future, are going to be paying to bail the banks out - be they tracker holders, variable or fixed rate holders. It's nothing but a stroke of fortune what mortgage you decided to go for, and at this point, there's no point in getting bitter and twisted and jealous because you didn't pick a tracker. There's bigger problems out there - we'd do well to stop watching each other all the time, and focus our collective attentions on the idiots in charge around here.

eamo12 · 05-04-2011 12:01AM

Godge wrote: »

That is the complete opposite of capitalism. Sometimes it seems to me that Irish people want the upside of capitalism only.

Exactly - people want to benefit from the great rate they got (capitalism), but want the taxpayer to fund the low rate when in reality the banks should be in liquidation and all contracts nullified (what's the opposite to capitalism?)

murphaph · 05-04-2011 07:25AM

eamo12 wrote: »

Exactly - people want to benefit from the great rate they got (capitalism), but want the taxpayer to fund the low rate when in reality the banks should be in liquidation and all contracts nullified (what's the opposite to capitalism?)

If the banks went into liquidation somebody else would buy the debt (cheaply) and take over the mortgage contracts. They would continue to charge tracker holders the same rates and charge variable rate holders possibly even more than at present.

It strikes me really that you're just jealous that others managed to think things through a bit more when drawing down/switching their mortgages. If tracker mortgage holders should lose their trackers, should those who received 12/24 month introductory discount rates have to pay those savings back?!

RichardAnd · 05-04-2011 08:47AM

LEt me just say that this thread really demonstrates why the Irish appear so meek in accepting cuts and taxes when compared to other europeans. We're just so caught up in our favourite pass time; begrudgery. There's no point in looking to the larger ills in the world becuase my neighbour has a new car, the b**tard. That sums up the irish attitude I think.

But anyway, I'm off now to let their air out of the tyres on civil servants' cars and when I'm done with that, I'll come back here and make a few narrow minded posts over int he public servants' wages thread. A proud day to be Irish once again

bamboozle · 05-04-2011 09:00AM

RichardAnd wrote: »

LEt me just say that this thread really demonstrates why the Irish appear so meek in accepting cuts and taxes when compared to other europeans. We're just so caught up in our favourite pass time; begrudgery. There's no point in looking to the larger ills in the world becuase my neighbour has a new car, the b**tard. That sums up the irish attitude I think.

But anyway, I'm off now to let their air out of the tyres on civil servants' cars and when I'm done with that, I'll come back here and make a few narrow minded posts over int he public servants' wages thread. A proud day to be Irish once again

great post

dont forget i presume the majority of tracker mortgages were taken out during the boom which would leave a significant portion of these properties now in negative equity not to mention the financial circumstances of their owners to be vastly different.

this begrudgry is pathetic.

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

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