Let's all be clear here: Tracker mortgage holders have it pretty good. Over a 300k loan, they're making off with €450 savings per month compared to their non tracker equivalent. Additionally, drops in ECB rates see the losses taken by the banks transferred on to non-tracker mortgages, meaning they're effectively paying more so trackers can pay less.
One of the few downsides of the tracker though is the non-transferable nature of it. If I want to move house, then I lose the tracker and move onto a standard product.
Now TSB are to allow people transfer their tracker amount to new mortgages when they want to move, with other banks allowing it for 5 years.
Homeowners can move and keep their tracker mortgages - Independent.ie
For homeowners the advantage is obvious. If you bought a tracker on a 2 bed apt 6 years ago and have since had kids etc, they've felt trapped in that mortgage because the cost of giving it up is so high.
But here's why it makes sense for the banks to do it as well: You can't get out of the tracker rate right now (unless some pretty radical legislation is passed) so you're going to have to take the loss anyway.
But by following this model, they help increase demand for houses (particularly those all important 3 bed semis in Dublin) as well as getting the family to use your bank to get the extra (non-trackered) cash needed to buy. So you're stoking the market and giving out additional loans to people who have already been successfully repaying you up to now.
This isn't going to represent some sea change in the banks fortunes, it's not going to really address the problem of defaulters right now, but it will help the families who are feeling trapped by their trackers.