Pragmatism by banks on tracker mortgages must be welcomed
The moves by Bank of Ireland and Permanent TSB to facilitate homeowners in moving house without losing all of the benefits of their tracker mortgages are to be welcomed. One of the most damaging effects of the mortgage crisis has been to strip families and individuals of the ability to move home as their circumstances require it – whether to follow a job or to find space for growing families.
The reality for many families in the wake of the property crash is that they are trapped in their homes both by negative equity and fear of having to cope with the effects of losing the favourable borrowing rates secured during the boom.
That kind of trapped generation is no good for us, socially or economically. Mobility – physical, as well as social and financial – is necessary if we are going to aspire to any kind of quality of life.
Under Bank of Ireland's plan, customers will give up some benefits of their cheap loans, in return for being able to move house.
It must be remembered that while tracker mortgages have been a boon to consumers, they continue to damage the banks that simply don't make a return on the ultra-cheap loans. Up to now banks have tried to devise ways of luring customers off the trackers, with understandably poor results.
That those banks are struggling with the fallout of their own financial folly is neither here nor there if it means they cannot lend, just as a cheap home loan is of less and less use if the home itself is unsuitable. That is why the pragmatism of the latest approach is particularly welcomed.