Monday 23 April 2018

Don't give up tracker for less than 20pc debt write-off, advises broker

Charlie Weston

Charlie Weston

PLANS to change rules to allow lenders take tracker mortgages from strapped homeowners could provide a huge windfall for banks.

Tight controls are needed to protect consumers from attempts by banks to snatch trackers from distressed mortgage holders, the Irish Brokers Association said.

The Central Bank confirmed this week that it is proposing changing the rules to allow banks to take a tracker mortgage from someone who is in arrears as long as the deal offered "is more advantageous in the long term".

Banks are constantly complaining they are losing money on trackers. The average tracker interest rate is around 2pc, while the variable rate is 4.3pc.

Ciaran Phelan, of the Irish Brokers Association (IBA), said mortgage-holders should hang on to their trackers unless there was a massive financial incentive to switch to another rate.

Calculations by the IBA indicate that a tracker is so valuable that it should only be revoked if the homeowner is getting between 20pc and 30pc of their debt written off.

This would mean that someone with a €400,000 mortgage who is in arrears should have at least €100,000 written off before ditching their tracker.

"Tracker mortgages are valuable and we are advising those who have one to seek independent advice," said Mr Phelan.

Irish Independent

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