Saturday 16 December 2017

Money talks -- if only you can spare the cash

PERMANENT TSB, Ireland's largest mortgage lender, is expected to announce today that it will allow its tracker mortgage customers €10 for every €100 they overpay.

Other lenders will probably follow suit shortly. Since, proverbially, no such thing exists as a free lunch, the offer does not flow from philanthropic motives. If the scheme succeeds, the lenders stand to save themselves a substantial amount of money.

This rather odd situation arises from the relative cheapness of tracker mortgages at present. Lenders have to borrow money at much higher interest rates than those they charge on trackers, though not on other mortgages. At present the tracker mortgages, so far from making a profit for lenders, cost Permanent TSB about €400m a year.

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