Banks stripping homeowners of tracker policies
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HOMEOWNERS who are forced to go to their banks and building societies to renegotiate their mortgages are finding they have no choice but to give up their trackers.
Tracker mortgages are hugely expensive for banks as the lender guarantees to charge an interest rate which is a set percentage above the European Central Bank rate. With the ECB rate at 1pc, some homeowners have trackers as low as 1.5pc, because their mortgage rate is set 0.5pc higher than the ECB rate.
But homeowners in arrears (generally defined as being more than 90 days behind on repayments) who seek a moratorium, or freeze, on their payments, are being told their trackers will be taken away.
Director of the Irish Mortgage Corporation, Frank Conway, said: "If you are seeking to increase your loan term or want a moratorium then the bank will respond that you are breaking the terms and conditions of the mortgage and will force you to give up your tracker." He added that "beggars can't be choosers" was the way banks were looking at it.
Anyone facing arrears should instantly engage with their bank or building society in an attempt to limit the damage, Karl Deeter of Irish Mortgage Brokers said.
"The first step is generally to increase your loan term, then go interest only, then moratoriums -- and those solutions tend to be offered in that order by the institutions as well."
People need to make hard decisions, one of which is whether or not they will be able to return to full repayment further down the line, he added.
Mr Deeter said a mortgage rescue scheme was likely to be put in place by the Government and banks soon to help the most vulnerable debtors but the scope and shape of it was unknown at present.
- Charlie Weston
Irish Independent
