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Thread: Great news if you have a tracker mortgage

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    Politics.ie Member hammer's Avatar
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    Default Great news if you have a tracker mortgage

    | Irish Examiner

    This will give tracker mortgage holders a lot of confidence for 7/8 months.


    If you are a variable rate mortgage holder you are in deep trouble. These tracker mortgages are a loss maker for the Banks so they will need to recover these losses from other mortgage holders, SMEs, personal overdraft, personal loan, credit card, car loan customers.

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    Politics.ie Member Grumpy Jack's Avatar
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    Woo hoo, as the great Homer would say.

    They were stupid enough to give us a tracker and, to quote Stephen Fry on his iPad, they are gonna have to prise it from my cold dead hands.

    Saving a fortune on it - keeping up the old repayments from our 4.75% fixed that we came off in March 2009. We're able to pay an extra €500 a month off the principle and our term is now down to under 12 years at the tracker rate of 2.25% we're on now - down from 18 years this time last year. Every two months, we pay an extra month. Long may it last.

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    Was there ever any advantage to the bank to offer tracker mortgages?

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    Quote Originally Posted by PrinceMax View Post
    Was there ever any advantage to the bank to offer tracker mortgages?
    competition gone mad 5 years ago !

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    Quote Originally Posted by PrinceMax View Post
    Was there ever any advantage to the bank to offer tracker mortgages?
    They offered tracker mortgages on the assumption that the cost of funds for the banks would continue to literally track the ECB.

    When the financial system imploded this of course all changed. My understanding is the cost of funds for the banks is something like 3pm above ECB now so banks are losing their shirts on trackers and will probably have to raise standard variables rates by at least another 1pc

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    Politics.ie Member mr_anderson's Avatar
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    Quote Originally Posted by grafter1 View Post
    When the financial system imploded this of course all changed. My understanding is the cost of funds for the banks is something like 3pm above ECB now so banks are losing their shirts on trackers and will probably have to raise standard variables rates by at least another 1pc

    I think I read something along the lines of 1.5%.

    In reality, its a swings and roundabout scenario.
    As variable rates rise, so property prices will continue to fall.

    Many who got trackers bought during the boom years and so, will suffer capital appreciation.

    Of course anyone who bought with variable rates during these times are going to be royally screwed on both sides - interest and capital loss.

    Given the choice though, its probably better to be on a 4.5% variable with a €300,000 mortgage, than an ECB+1.5% tracker with a €600,000 mortgage.

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    Quote Originally Posted by PrinceMax View Post
    Was there ever any advantage to the bank to offer tracker mortgages?
    It was a mismatch of offering long-term loans on the basis of overnight and 3 month interbank funding money rates. Trackers can work as long as the margins are based on long-term lending rates meaning a circa 2.5% margin rather than the 1% margins that were generally on offer.

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    Quote Originally Posted by Grumpy Jack View Post
    Woo hoo, as the great Homer would say.

    They were stupid enough to give us a tracker and, to quote Stephen Fry on his iPad, they are gonna have to prise it from my cold dead hands.

    Saving a fortune on it - keeping up the old repayments from our 4.75% fixed that we came off in March 2009. We're able to pay an extra €500 a month off the principle and our term is now down to under 12 years at the tracker rate of 2.25% we're on now - down from 18 years this time last year. Every two months, we pay an extra month. Long may it last.
    That is a great attitude to have in paying off your mortgage. Keeping the repayments at the higher level can a) drastically cut the term of the loan b) lower the overall interest cost, and most importantly c) provides a buffer against a change in circumstances as you can cut repayments to the level required by the tracker instead of the current level of payment.

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    Politics.ie Member hammer's Avatar
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    EBS raised rates by .6% also today. Competition Authority should investigate

    Permanent TSB .5%
    AIB .5%
    BOI .5%

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    im on a +1%..........

    sometimes intelligence does actually pay off, which is very important for society going forward.......

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