PTSB will take months to restore borrrowers' trackers
It will be at least two months before people initially denied a return to a tracker mortgage by Permanent TSB (PTSB) will be restored back to the low-cost mortgage rate and get compensation, it has emerged.
When the process is complete, mortgage customers of the State-owned bank could share in a refund of up to €30m after the bank withdrew its Supreme Court appeals of cases involving four customers who wanted to switch out early from fixed-rate mortgages into trackers.
PTSB is now set to restore as many as 2,000 mortgage holders to trackers, and compensate them.
The windfalls are likely to be between €10,000 and €15,000 per customer.
The bank faces a fine of up to €10m from the Central Bank for failing to restore the customers to trackers.
The regulator is taking what it calls "enforcement action" against the bank.
But it is understood it will be at least June before the process, which is being overseen by the Central Bank, is complete.
Others banks may also have to restore customers to trackers.
It is now two months since PTSB and admitted it should never have denied the mortgage holders the option of returning to lucrative trackers.
Fianna Fáil finance spokesman Michael McGrath has urged the bank to speed up the restitution process.
He called on the Central Bank to do more to ensure the affected customers are restored to the low-cost mortgages.
"The bank needs to contact all the customers affected by this issue and immediately put them on an appropriate tracker rate.
"The bank also needs to repay these customers all the additional interest they were wrongly charged on their mortgage."
And the customers should also be compensated by the bank, Mr McGrath added.
"Furthermore, the Central Bank needs to use its enforcement powers to ensure there is an adequate deterrent in place to prevent issues like this happening again," he said.
The bank had originally refused to allow some customers who had switched from a tracker rate to a fixed-rate mortgage to revert to the tracker rate.
A glitch in the IT system of PTSB meant customers were able to come off the fixed rates early, at a time when interest rates were falling, without a penalty.
But the bank would not allow them to revert to trackers, despite promising this. It argued that they had breached the terms of their deal by exiting the fixed rates early.
The Government must use October's Budget to kick-start plans to introduce a state-funded grant system for first-time buyers, according to former junior minister Joe Costello.
Under the plans, couples living in urban areas would receive cash grants from local authorities to help them meet strict Central Bank deposit limits on mortgages.
The measures are being considered by Environment Minister Alan Kelly as part of a wider plan of solving the housing crisis, his spokesman told the Irish Independent last night.
One mortgage expert said such a move would provide a major boost to first-time buyers - but that collaboration with the banks is required.
"While we definitely believe that plans to assist struggling First-Time Buyers (FTBs) are needed and so we welcome the Government's proposals, we would stop short at saying that this will be the panacea the market needs," said the director of the Association of Expert Mortgage Advisers, Ken Murray.
A similar scheme, which previously saw first-time buyers being given grants of up to £IR3,000, was scrapped in 2002. Mr Costello said the Government should kick-start the scheme in the Budget.