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How big are the Banks' losses on Tracker Mortgages?


Tommythecommy

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Jun 10, 2010
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197
How big are the Banks' losses on Tracker Mortgages?

There are probably 300,000 tracker mortgages on the Irish Banks Balance sheets. Some of these are generating as little as 0.65% on top of the ECB rate.

If the average tracker was €200,000+ the total sum for trackers is probably of the order of 60billion. the banks borrowed short term and bet long term that they could make money lending at as little as 0.65% above the ECB rate.



If the banks were making a gross loss of 0.5% on these loans the ball park loss would be 300 million. Could the losses of the banks on these loans reach a billion a year or more?

Under the current capital reserve rations 60 billion of lending requires 4.8 billion of the banks' capital. So a lot of bank capital is tied up making a loss.

Even if the borrowers pay every cent back that they are required to these loans are set to be loss makers for much of the next decade.

I don't know what the losses are for the banks on these loans but they may turn out to be even greater loss makers than they are at the moment.

There is little prospect of more competition in the lending market until the property crash is completed.
 

HarshBuzz

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Feb 28, 2008
Messages
11,935
next decade?

try 'next three decades' :p

anyone who has a tracker mortgage should cherish it
 

grafter1

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Apr 1, 2010
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+1.1% for me but many here seem to be on a better rate. It is fantastic, mortgage is "F" all - happy days!
Yeah i worked out that the drop in the value of my house will be offset if rates remain at 2% or under for the next ten years. Can't complain about that. We've already had almost two years.

* Calculated against 4.25% ECB in 2008 (current value)
 

hmmm

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Oct 4, 2006
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2,834
It's been interesting to see the small beginnings of a media campaign to force those on a tracker to pay more. You can see it in the relatively subtle language describing those on variable rates as "subsidising" those on trackers.

Now that the chances of a taxpayer bailout are subsiding, the tigerettes who overpaid for property and took no notice of the mortgage conditions are casting around for someone else to pay their mortgage.
 

Tommythecommy

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Jun 10, 2010
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197
The Trackers are safe even if the Banks & State fail

It's been interesting to see the small beginnings of a media campaign to force those on a tracker to pay more. You can see it in the relatively subtle language describing those on variable rates as "subsidising" those on trackers.

Now that the chances of a taxpayer bailout are subsiding, the tigerettes who overpaid for property and took no notice of the mortgage conditions are casting around for someone else to pay their mortgage.

The Trackers are safe even if the Banks & State fail
 

foreignfield80

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Sep 5, 2008
Messages
654
Any alteration to the mortgage outside of an ECB increase in rates will surely be a breach of contract, I'm sure anyone on the tracker is able to spend the savings elsewhere, I think there is a greater benefit to the economy that way. Let the banks twist, they are signatories to the contracts same as the mortgagee (think I have my terms correct??).
 

jacko

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Mar 6, 2009
Messages
2,666
every house will be valued by the state in advance of a property tax.

Whats the betting that banks will latch on to you house valuation, tell you that you now breach the loan to value criteria for your tracker and make you switch to a variable
 

drjimryan2

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Nov 16, 2009
Messages
1,718
i have a +1 mortgage. i have it because i predicted what was happening and switched when i could......i took the time to study this area and acted when the time was right.........

thats what i did, others bought celtic shares, backed horses and learned the complexities of the offside rule.........

we all make choices, some right , some wrong....

those of us who have our priorities right should never feel guilty.........

and i'm waiting for the call from the bank wishing to 'buy back' my tracker!
 

Tommythecommy

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Jun 10, 2010
Messages
197
Any offer for a buy back would have to cover taxation

Then I presume you are saving up to pay the consequent capital gains tax liability so?
Any offer for a buy back would have to cover taxation to entice the tracker holder
 

blacbloc

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Nov 11, 2008
Messages
590
It's been interesting to see the small beginnings of a media campaign to force those on a tracker to pay more. You can see it in the relatively subtle language describing those on variable rates as "subsidising" those on trackers.

Now that the chances of a taxpayer bailout are subsiding, the tigerettes who overpaid for property and took no notice of the mortgage conditions are casting around for someone else to pay their mortgage.
Exactly so. The banks' friends in the media need to be exposed wherever they attempt this line of argument. Nobody is subsidising anyone in this regard: they made their choices and must now live with the consequences.
 

drjimryan2

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Nov 16, 2009
Messages
1,718
tax is good........

100% less 20% cgt = 80% profit......

you only pay tax on gain.......

'pay your taxes, even to the romans' (jc).....
 

olamp

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Mar 24, 2010
Messages
1,452
Hang on to your tracker mortgage guys --hopefully there is no legal way that our useless banks can force us out of them --at the moment they are worth their weight in gold .
 

Sue Donim

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May 10, 2009
Messages
199
I got my tracker in 2008 - I just missed the + 1.1% and had to settle for a +1.2%, but even that is sehr gut (just practicing my German - cause thats where all our children will be trying to emigrate to soon by the looks of things). My monthly payment on my 3 bed semi in Lucan is still less that I was paying to rent a 2 bed apartment in the burgeoning ghetto that is Adamstown which is shaping up to be the prime proving ground for the theory of white flight in Ireland.
 

Expatriot

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Dec 7, 2009
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4,325
Such is my distrust of banks I am still trying to repay my tracker early...
Banks never lose, its the law.
 

Expatriot

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Joined
Dec 7, 2009
Messages
4,325
It's been interesting to see the small beginnings of a media campaign to force those on a tracker to pay more. You can see it in the relatively subtle language describing those on variable rates as "subsidising" those on trackers.

Now that the chances of a taxpayer bailout are subsiding, the tigerettes who overpaid for property and took no notice of the mortgage conditions are casting around for someone else to pay their mortgage.
The tax system will be used to do this, interest relief and the property tax revaluation putting you outside of the terms of your contract. The banks will get their way, there will be no free lunches.
 

Sensor

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Oct 7, 2009
Messages
530
ECB's interest policy is not driven by profit but the overall good of the economy. Whereas the individual banks are profit driven and where possible will set interest rates to maximize profits. It is a no brainer to go for a tracker mortgage. That is why there are so many people on tracker mortgages.
 

Expatriot

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Dec 7, 2009
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4,325
I could never understand the tracker from the banks point of view. I got a very low rate thankfully and I reread it several times, I thought there must be a catch as there was no profit in it for the bank really. How did they miss this? Are they just that stupid or was there some other benefit like they could sell the mortgage off as a bond or something?
 

Tommythecommy

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Jun 10, 2010
Messages
197
The banks were after market share

I could never understand the tracker from the banks point of view. I got a very low rate thankfully and I reread it several times, I thought there must be a catch as there was no profit in it for the bank really. How did they miss this? Are they just that stupid or was there some other benefit like they could sell the mortgage off as a bond or something?
The banks were after market share. It would have worked if they restricted their lending book to the Irish Deposit base.

They got greedy and decided to lend a multiple of the Irish deposit base borrowing short term and lending long term at ruinously low rates.

I guess the Irish deposits are a cheap source of funding along with the NAMA bonds which are 80% fund-able at 1.5% from the ECB

Irish Savings and Investments Interest Rates 1 Month 30 day
 
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