ECB cuts rate to 1.25%

Welease wrote: »

So what you are saying is that all the economic commentators, governments and financial educated people are wrong? and in fact trackers are not a loss making position for the banks? It is mere perspective?

Going futher, PTSB were making even more errors by attemping to get rid of trackers at at 10% bonus? because they are in fact making money?

Does that sum up your position?



But that doesn't work with your scenario...

If the liability has been cleared from the banks books... and the total sum repayed to the original lender, then what does it matter what the current cost of borrowing is? Under your belief it is completely irrelevant.. Any new loans would be taken under new higher interest rates.. therefore the banks would never make a loss on any loans?

Maybe just maybe, as I and many others have stated again and again, your loan is not taken in isolation and the banks continue to borrow short term to fund long term loans? (essentially revolving money through the system). So while you mortgage continues to exist, then the bank have to continue to short term borrow money to fund it (as higher interbank rates than the ECB + bank rate)

I am saying that the ongoing costs and cost of borrowing is so high that getting people to pay back their trackers gives them more liquidity and give them more leverage. Where did I say anything about a bank never making a loss on a loan? As I say people have defaulted or are in mid default..or stopped paying their mortgage..

As for the loss making my point is that if the banks stopped dead lending after giving out the trackers and all the tracker mortgage holders paid off their loans in full with interest yes the bank would make a profit..but they dont do that they leverage this new asset (loan repayments) to get further money and as point out its kinda roled over and loaned out again...but if these loans are peforming and paid back in full then the bank makes a profit..The only time when this doesnt happen is if the loan is not paid or the asset is not worth the amount held on the balance sheet and these two points have happened over the last 4/5 years property is down and lots of neg equity and people are stopping payments to their mortgage..

So my point is you are subsidising defaults, futher costs of borrowing and ongoing banking costs..

No one yet has come back with how you can subsidise an asset...

and I have not even thus far brought up the bank bailout and how that further writes down any liability that the bank has

fliball123 wrote: »

Is it not true because you say so?

NO BECAUSE OF HOW BANKS FUNCTION.

fliball123 wrote: »

I am saying that the ongoing costs and cost of borrowing is so high that getting people to pay back their trackers gives them more liquidity and give them more leverage. Where did I say anything about a bank never making a loss on a loan? As I say people have defaulted or are in mid default..or stopped paying their mortgage..

So you are saying that the only trackers makign a loss are defaulted trackers? Any data to back that up?
It flies in the fact of ever article or comment produced by the industry in the last 8 months..

fliball123 wrote: »

As for the loss making my point is that if the banks stopped dead lending after giving out the trackers and all the tracker mortgage holders paid off their loans in full with interest yes the bank would make a profit

Correct, but if they could pay it off immediately they probably wouldnt need a mortgage would they...

fliball123 wrote: »

..but they dont do that they leverage this new asset (loan repayments) to get further money and as point out its kinda roled over and loaned out again...

Again correct.. We are getting somewhere now.. This is at a high level how banking works.. and you seem to have moved on from your position that your loan is paid for and dealt with in isolation.

fliball123 wrote: »

but if these loans are peforming and paid back in full then the bank makes a profit..The only time when this doesnt happen is if the loan is not paid or the asset is not worth the amount held on the balance sheet and these two points have happened over the last 4/5 years property is down and lots of neg equity and people are stopping payments to their mortgage..

Wrong... and this is where you continue to be wrong.. as the money has to continually revolve through the system (which as you stated above is how banking works) they are charged different rates of interest.. The current rates far exceed the ECB + bank rates, so while I continue to full pay (indeed overpay my tracker) it costs the banks 5%+ to roll that funding over while they only receive 1.75% from me.. It is a full performing LOSS making mortgage to the banks.

fliball123 wrote: »

So my point is you are subsidising defaults, futher costs of borrowing and ongoing banking costs..

Wrong.. if you can show any evidence that only defaulting trackers are loss making for the banks then I'm sure you will produce it..
And the further costs of borrowing, would be the further costs of borrowing to service YOUR (and others) mortages.

fliball123 wrote: »

and I have not even thus far brought up the bank bailout and how that further writes down any liability that the bank has

Because much like bonus's etc. it's irrelevant to the mechanisms of funding mortgages?

Welease wrote: »

So you are saying that the only trackers makign a loss are defaulted trackers? Any data to back that up?
It flies in the fact of ever article or comment produced by the industry in the last 8 months..



Correct, but if they could pay it off immediately they probably wouldnt need a mortgage would they...



Again correct.. We are getting somewhere now.. This is at a high level how banking works.. and you seem to have moved on from your position that your loan is paid for and dealt with in isolation.



Wrong... and this is where you continue to be wrong.. as the money has to continually revolve through the system (which as you stated above is how banking works) they are charged different rates of interest.. The current rates far exceed the ECB + bank rates, so while I continue to full pay (indeed overpay my tracker) it costs the banks 5%+ to roll that funding over while they only receive 1.75% from me.. It is a full performing LOSS making mortgage to the banks.



Wrong.. if you can show any evidence that only defaulting trackers are loss making for the banks then I'm sure you will produce it..




Because much like bonus's etc. it's irrelevant to the mechanisms of funding mortgages?

Point 1 No tracker that is paying back their loan is NOT making a loss it is UNDERPERFORMING when compared with the cost of borrowing presently as pointed out if the ECB shoots up to 10% are we still then so called subsidising the variable rate?

As for the 2nd point..You may have misunderstood me...I am saying in a scenario where when all tracker mortages taken in isolation paid back there full loan amount with interest and the banks stopped lending so no rolling over the trackers repayments the bank would make a profit and yes there would be a need for a mortage?

as for the 3rd point a loan is dealt with in Isolation no one else pays my loan..what the bank chooses to do with that money when I am paying back this loan is their business..Its like putting a bet on for 5 Euros winning back 10 quid and then puting that 10 on again and losing it and then trying to say that its the fault of the original 5 Euro bet that you lost your money.

As for point 4 This is where we differ..You think that the tracker mortgage holder should be responsible for the banks gambling and using the money they pay back in good faith for further loans. As in the analogy in 3 if you keep putting your winnings on the law of averages is that your going to lose your money..I think where we differ is that you see loans as a whole I see an individual mortgage where the money with interest is being paid back..Why do people with variable mortgages blame tracker mortgage holder for the gambling of bankers

As for Point 5 have a look at Nama why was is set up..The liability side of most banks have been completely written down or do you deny this.

As for point 6 so bankers bonuses, banking costs have no correlation to what your paying..Then why are banks increasing interest rates even without the ECB going up.

Variable rate mortgage holders Vs Tracker mortgage holders.

Private sector workers Vs Public sector workers.

All tearing strips off each other.

Seanie Fitz, Fingers and Biffo must be loving this. Not only does Divide and Rule work - but Divide and Slink away to enjoy big fat pension while everyone is distracted knocking lumps out of each other works too!

Bertie waved shiny things at us to get our attention. It worked.

Now the powers that be shout -'look, that other guy (on the dole/ in the PS/with a Tracker) is getting a better deal then you!!' It's working.

Mature nation my hole :mad:.

RoverJames wrote: »

Mortgage of €368,000 on a gross salary of €36,000 :eek:

If someone took out a mortage that high on that level of salary, they were asking for trouble and deserve no help as they knew it was unmaintainable!!

Head The Wall wrote: »

I'll have no problem spending it, I'll be very happy with the value I will get for it. You seem to be implying I would have been happier spending even more for the same thing a few years ago, I don't think so

implied nothing , I meant what I said genuinely.