NIB is last to offer tracker mortgages as AIB pulls plug
Allied Irish Banks has pulled its tracker mortgage product to new mortgage applicants -- leaving National Irish Bank as the last lender offering this option in the market.
"For some time now, the tracker mortgage product has been under review because of the continuing high cost of funds in the market," said AIB.
"Tracker mortgages are priced off the ECB rate, but funded at money market rates, which given current market conditions is unsustainable."
Irish borrowers who have tracker mortgages see their payments move automatically in line with the main European Central Bank rate.
Trading
Last year, the key Euribor rate at which banks lend to each other was priced at less than 0.1 percentage point above the ECB rate.
The Euribor rate is currently trading at a 1.63 point margin to the ECB rate.
AIB said that customers who have an offer of a tracker mortgage, but which is not yet drawn, will still be able to avail of the product within the original terms of the agreement.
Bank of Ireland and its subsidiary ICS Building Society also stopped taking new tracker mortgage business yesterday.
Tracker mortgages first took off in Ireland in 2004 but lenders have been pulling the product one by one in recent months.
- Joe Brennan
