Bank wants to take trackers off homeowners who are in arrears
A LEADING bank has told regulators it should be able to take tracker mortgages off anyone who goes into arrears.
Ulster Bank believes that homeowners who are behind on their repayments have breached the terms of their contract, and the bank should be free to remove the good-value tracker.
The bank, which was rescued by the British taxpayer, told the Central Bank that trackers should be taken away in return for putting in place a restructuring of monthly repayments.
In a submission on changes to the code of conduct for mortgage arrears, Ulster Bank said it was losing money on trackers.
"(Where a contract is broken) the bank should not in any case be legally prohibited from removal of a tracker rate as part of agreeing an arrangement or permanent restructure," its submission says.
A spokeswoman for Ulster Bank said the proposal was for cases where the bank believes the customer is not prioritising the home loan.
The revised Central Bank mortgage code has prised open the previously watertight block on banks snatching trackers off homeowners.
For the first time since the arrears code came in, banks will be able to get a customer off a tracker if they offer a long-term solution to homeowners in such trouble that the next step is to repossess the home.
Around 375,000 homeowners have trackers – the cheapest mortgages in the market.
Typical tracker-rate customers are paying interest of an average of 1.8pc.
Meanwhile, the Irish Banking Federation tried but failed to get debt write-offs removed as an option lenders could offer struggling homeowners as part of the new mortgage arrears code.
Consumer groups said banks were now in full control when it came to dealing with people in mortgage arrears.
Director general of the legal rights body FLAC, Noeline Blackwell, said: "Lenders will control how they deal with arrears more than they ever did before. It is likely to result in borrowers in arrears coming under considerable pressure to accept whatever alternative offer is made to them by their lender, if one is made at all."