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Banks could soon offer €15k to ditch trackers

BANKS could soon offer customers up to €15,000 off their mortgages to switch to another lender.

According to industry sources, financial institutions are particularly keen to rid themselves of holders of tracker mortgages, which are loss-making for banks.

However, unless the offer is considerably more than 5pc of the loan amount, customers have been advised to stick with their tracker.

On a €300,000 mortgage, 5pc amounts to €15,000 but tracker holders, in particular, have been told not to accept any offer below 25pc.

Tracker mortgages are based on a commitment by lenders to only increase rates when the ECB moves its rates.

Head of Compliance Ireland Peter Oakes has already warned that lenders' lawyers are looking at the contracts to see if they can find ways to change the terms of the deals.


Mr Oakes said the question really was whether any of the banks that have ECB tracker rates will try and look at the fine print of the mortgage contracts which might allow them some "wriggle room".

Frank Conway, a director with the Irish Mortgage Corporation, said banks are looking for every opportunity to get out of tracker mortgages.

Repayments on a €300,000 mortgage over 30 years can cost €231 less a month on a tracker compared to the standard variable rate.

Homeowners looking to rent out their property were warned this may come at the cost of their tracker.

Commentators said banks may look to switch such customers on to investment property mortgages.

As these rates now start at more than 4pc, it would mean a dramatic increase in funding costs.


However, the Irish Brokers Association (IBA) has urged mortgage holders not to feel pressured into changing their loan terms or switching to another provider.

Bank of Scotland, which introduced tracker mortgages into Ireland, offered borrowers more than €1,000 if they switched lenders.

The bank stressed it was not providing financial incentives to switch mortgage accounts to other lenders.

It told mortgage holders it would not be able to provide additional finance such as top-ups and customers would have to source this from another lender.

"In recognition of the fact that individual customers may wish to move their mortgage to another provider to avail of such further facilities, Bank of Scotland (Ireland) is willing to contribute €1,000 towards legal fees and €150 towards valuation fees," the Bank of Scotland offer stated.

See Dan White, Page 14