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Be tactful – don't mention your tracker

Remember a few years ago when that bloke on the double-decker bus stood up and revealed to the nation that he didn't know what a tracker mortgage was?

Well, I knew exactly how he felt. It seems impossible now, but there was a time when the more esoteric aspects of mortgage finance were Greek to me.

Then, I had a vague idea that the interest rate of a tracker mortgage followed something or other. The euro? The dollar? The price of tea in China?

Suffice to say I had to rectify my mortifying ignorance on the subject before buying a house (it follows the ECB rate, but you knew that).

I have to point out that I wasn't the only eejit unaware of the financial implications of a tracker mortgage – the banks seem to have been a bit hazy as well.

Mortgages were being handed out willy-nilly to people who could afford them and to quite a lot who couldn't. Tracker, variable, fixed – the banks didn't seem too fussy, nor did the customers (more than half of Irish mortgages are tracker).

Back in the Good Old Days, those who owned properties were making money in their sleep as their equity rose and rose. How could that even be legal?

ANTIPATHY

Even better for them, they could borrow on that equity, buy more property and make even more easy money.

And then there were the people like me and many of my friends, trying to get on to the property ladder or moving from a starter home to one with an extra bedroom for the kids and wishing we'd kept our communion money to put a deposit on a house as soon as we'd finished our Leaving Cert.

At dinner parties in property owning-friends' newly renovated marble-topped kitchens we'd have to listen as they helpfully calculated how much money we'd lost by renting for all those years.

Then the crash came and investors, re-mortgagers and new home-owners all found themselves up the proverbial creek in a negative-equity swamp.

Add swingeing pay cuts and we were all suddenly united in our new antipathy to those with mortgages already paid off or those with permanent pensionable jobs in the public sector.

"Don't mention the war" was the mantra if you happened to invite a civil servant and a newly unemployed construction worker along for a spot of recession curry of a Friday evening. Now the "don't mention" topic at dinner parties is those trackers again.

Everyone wants to know if their neighbour, who bought the house next door at about the same time, has a tracker mortgage. But they're afraid to ask. Because if Joe next door was lucky enough to get one, he could be paying at least €500 less than you every month for exactly the same house.

Even worse, if Joe decides to move now he could very well be allowed to bring his gold-plated tracker with him. At least if Michael Noonan has his way.

As Permanent TSB leads the way with full transfer of tracker mortgages (KCB to follow and Bank of Ireland and Ulster Bank allowing transfer for five years), the finance minister is putting pressure on AIB to follow suit, meaning the State will foot the bill.

So, is it fair that some people will end up paying for the luck of others? No. But none of this property nonsense has been fair – not the hype, not the negative equity, not the mortgage rates, not the civic shouldering of the banking debt.

But one thing is sure – we all know what a tracker mortgage is.


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