Tuesday 28 January 2020

Rate 'trap' denies us a functioning housing market

GOT a tracker? Stay put, don't move, even if you need to relocate.

That is the message for the tracker generation.

They realise that moving house will mean losing the tracker, and they know that they would be crackers to give up their trackers.

So they stay in homes that are too small for their growing families, or too far from their workplaces.

Often the solution to this situation sees the tracker-holding family becoming accidental landlords.

This is because their original home is no longer suitable, but they won't sell it for fear of losing the tracker. So they rent out their original home and become tenants themselves in a location that works better for the family.

This could be called the tracker trap.

Trackers are cheap, cheap mortgages the likes of which we will never see again.

They were introduced at a time when money was cheap for banks, and are now massively loss making for the lenders.

Banks have looked at every option to extract homeowners from these products, but have failed.

Central Bank rules make it virtually impossible for a bank to take a tracker off an existing customer – unless you are moving house and signing up for a new mortgage.

It is frankly amazing that it has taken banks so long to realise that people will not move if they have a tracker, and the only solution is to let them keep some of any new mortgage on a tracker rate.

Ulster Bank and Bank of Ireland have seen the light on this one. Permanent TSB is expected to sign off on a tracker-mover product later in the summer.

Time now for the other banks to realise that the tracker trap is one of the major issues denying us a properly functioning property market.

Irish Independent

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