# Banks redeeming tracker mortgages for a discount?



## RedRed (2 Jul 2020)

Hi 

Another question.  Any cases of banks redeeming mortgages for a discount?  I searched the forums and didn't find any hits indicating if this has been discussed before.

Simple logic being that they could re-lend the repaid balance at much higher rates, so they might be willing to offer a discount (say 10-15%) to redeem a tracker.  

Curious.


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## jhegarty (3 Jul 2020)

PSTB offered 10% off for extra payments back in 2011. But not since.


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## Brendan Burgess (3 Jul 2020)

The same question is asked frequently on Askaboutmoney and the answer is always the same.

Banks are not paying for people to redeem their trackers early. 

In some cases, vulture funds will do deals with people in deep arrears and negative equity, whether they have tracker mortgages or market rate mortgages.

Brendan


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## NoRegretsCoyote (3 Jul 2020)

It's adverse selection in reverse.

If you have the funds to cut a deal you have the funds to repay mortgage. So banks will hold you to your contractual obligations.




A colleague of mine tried this as long ago as 2013 I think and had no luck. That was when banks' cost of funds were much higher than they are now, and even performing trackers were structurally loss making.


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## RedRed (3 Jul 2020)

Brendan Burgess said:


> The same question is asked frequently on Askaboutmoney and the answer is always the same.
> 
> Banks are not paying for people to redeem their trackers early.
> 
> ...



thanks Brendan. This is not a situation of negative equity or arrears, but appreciate your feedback. Using a bond pricing analogy, one might have expected a loan asset issued at sub-1% to trade at a discount from the bank’s perspective, relative to a market rate loan. But I guess my logic only holds true if the banks are actually limited in their access to capital to issue loans. If they were, then it would be smart business sense for them to prioritize higher rate loans, than my tracker.


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## jhegarty (14 Aug 2020)

Just to confirm on this.  Payed off my (+1.1%) PTSB tracker this week. No discount , infact they added €27.48  for the interest in the days since the last payment.


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## Itchy (15 Aug 2020)

jhegarty said:


> Just to confirm on this.  Payed off my (+1.1%) PTSB tracker this week. No discount , infact they added €27.48  for the interest in the days since the last payment.



The state has a 75% interest in that €27 so thank you for your diligence! And congrats!


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