Tracker mortgages 'safe from changes'
TRACKER mortgage holders are safe from being hit in any solution to the funding problems in the banking system, Finance Minister Michael Noonan insisted.
Almost 400,000 homeowners hold trackers, which are losing money for the banks as the ECB rate is so low.
There were alarm bells for those homeowners fortunate to have tracker mortgages, as the troika wrapped up its final review mission under the bailout.
A senior European source warned that everyone needs to "chip in" if a solution can be found to ease the costs to the banks of loss-making tracker mortgages.
But Mr Noonan said there was no question of the terms of trackers being changed. "That would be illegal. They have the protection of contract law," he said.
The minister said the issues were being examined, but there were no proposals yet.
He said tracker mortgages were a funding issue for the banks and not one for the homeowners.
It is understood the European Commission wants banks to be more "proactive" in tackling the mortgage arrears crisis and finding a solution that suits the borrower – but sources have stressed it does not mean that mortgage contracts will be re-written.
"I think any realistic solution requires that everybody chips in," the senior European source said.
"Everybody needs to, even the person who has this very favourable loan deal."
About two-fifths of AIB's loan book are tracker mortgages, while Permanent TSB is particularly badly hit, with the loss-making loans making up about €15bn of the bank's loan book.
The bank loses money on the mortgages, which are linked to the official euro rate, even as they are being fully serviced.
This is because customers pay less to borrow from Permanent TSB than it pays to borrow on the markets.