Dearg Doom
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Ref: http://www.breakingnews.ie/business...e-banks-into-a-perilous-situation-568160.html
You hear a lot about Tracker Mortgages being the cause of a lot of bank problems. However the idea of a tracker mortgage per se is surely not the problem i.e. the bank can borrow funds at one rate and they then loan it out to the consumer at the same rate plus a margin. The issue is that they are tracking something that isn't related to the cost of funds to the bank and/or the margin was too slim.
What should tracker mortgages have been tracking instead of the ECB rate? Indeed is there anything you could base a tracker on that would work for both the bank and the consumer?
Is there a possibility of a mortgage product that gives a balance between value and stability of the monthly cost (e.g. 20-year fixed is very stable but very expensive, SVR is cheaper but the bank can up the cost at any time)? Something that can vary based on external factors but stops the banks ability to up their margin as it suits them?
You hear a lot about Tracker Mortgages being the cause of a lot of bank problems. However the idea of a tracker mortgage per se is surely not the problem i.e. the bank can borrow funds at one rate and they then loan it out to the consumer at the same rate plus a margin. The issue is that they are tracking something that isn't related to the cost of funds to the bank and/or the margin was too slim.
What should tracker mortgages have been tracking instead of the ECB rate? Indeed is there anything you could base a tracker on that would work for both the bank and the consumer?
Is there a possibility of a mortgage product that gives a balance between value and stability of the monthly cost (e.g. 20-year fixed is very stable but very expensive, SVR is cheaper but the bank can up the cost at any time)? Something that can vary based on external factors but stops the banks ability to up their margin as it suits them?