# Tracker Mortgages and the ECB / IMF Bail-Out



## Molly Bloom (22 Nov 2010)

Hoping some AAMers will have some pearls of wisdom for me on this ..... I have a tracker mortgage (ECB + 1%), and I know how lucky I am to have it! 

Just wondering, given the confirmation last night that a substantive loan will be given to Ireland by the ECB / IMF, is there any possibility that, as part of the repayments for this, and the attendant re-structuring of our economy, that we might be compelled to move to some 'higher' level of ECB rate (for sick economies, maybe including Greece, Portugal, etc)? Meaning a higher level of repayments for those with tracker mortgages?

What do people think?


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## aristotle (22 Nov 2010)

First it was "are my deposits safe", now its "are my trackers safe".

Yes, trackers are safe, you have a contract, unless you break any terms in that contract and the bank enforces it then you should be fine. The main concern might be that the banks will have no choice but to get people to re-value the property which might push people off certain trackers.


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## fraggle (22 Nov 2010)

What if banks are closed/sold/merged... can new terms be imposed as part of another company buying the business?


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## NorfBank (22 Nov 2010)

No, you have a contract. The new bank will take over that contract, they cannot change the terms unless this is specified in the conditions.

www.moneybackmortgages.ie


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## Towger (22 Nov 2010)

aristotle said:


> The main concern might be that the banks will have no choice but to get people to re-value the property which might push people off certain trackers.


 
+ 1

This is where the fun may start.


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## stymied! (22 Nov 2010)

this is exactly the kind of remark which will cause a panic..

_''The main concern might be that the banks will have no choice but to get people to re-value the property which might push people off certain trackers.''_

your tracker was contractually agreed on the value of house *at the time the mortgage was taken out.*..future falls/gains in property values will NOT affect your current mortgage contract or payments.


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## aristotle (22 Nov 2010)

You need to read your T&Cs of your tracker mortgage. Some\most of them have clauses relating to the value of the property where the determination of the tracker rate is based on Loan-to-value and the bank reserves the right to request a re-value.

If the value of the property has droppped then it may push you to a higher rate or a variable rate. Depends on the contract. Its standard in NIB tracker mortgages (I have one).

If NIB decided to force me to re-value then I would loose my tracker possibly, its in the T&C's. NIB have said previously (a year or two ago) that they will not go down this route. The point now is maybe they will have no choice giving the funding difficulties or use it as an excuse.


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## Paulk (22 Nov 2010)

KBC mortgage customers might be in a better position, as they are not with an Irish owned bank.


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## serotoninsid (22 Nov 2010)

aristotle said:


> If NIB decided to force me to re-value then I would loose my tracker possibly, its in the T&C's. NIB have said previously (a year or two ago) that they will not go down this route. The point now is maybe they will have no choice giving the funding difficulties or use it as an excuse.


I would imagine there would be a significant overhead for them in organising this?  Would it be enough in more marginal cases to not make it worth their while? Also, customers would have the option (assuming they can fund it of course) to pay in a proportion of the loan to bring them back within the threshold of the LTV deal they were on? Would that be the case?


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## PaddyW (22 Nov 2010)

Paulk said:


> KBC mortgage customers might be in a better position, as they are not with an Irish owned bank.



That's what I like to hear!


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## thedaras (22 Nov 2010)

Would it be fair to say that although the banks do have a contract for the trackers that it was based on loan to value,and they can argue that the loan to value has significantly decreased and that becomes their " get out clause"?


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## BazFitz (22 Nov 2010)

Molly Bloom said:


> Hoping some AAMers will have some pearls of wisdom for me on this ..... I have a tracker mortgage (ECB + 1%), and I know how lucky I am to have it!
> 
> Just wondering, given the confirmation last night that a substantive loan will be given to Ireland by the ECB / IMF, is there any possibility that, as part of the repayments for this, and the attendant re-structuring of our economy, that we might be compelled to move to some 'higher' level of ECB rate (for sick economies, maybe including Greece, Portugal, etc)? Meaning a higher level of repayments for those with tracker mortgages?
> 
> What do people think?


 
Folks, the OP isn't asking about losing a tracker or the bank reneging on the related contract.  The query relates to the imposition of a "new ECB rate" for Ireland (i.e. the margin would still be the same but the basis would be different).


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## aristotle (22 Nov 2010)

First I heard of the possibility of a different base ECB rate for Ireland. Why would that happen? It would only make it more expensive for banks to raise money and for people to pay back debts, surely it would make things worse?


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## BazFitz (22 Nov 2010)

Molly Bloom said:


> compelled to move to some 'higher' level of ECB rate (for sick economies, maybe including Greece, Portugal, etc)? Meaning a higher level of repayments for those with tracker mortgages?


 


aristotle said:


> First I heard of the possibility of a different base ECB rate for Ireland.


 
I can't see it happening either but it's what the OP was asking about.


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## Protocol (23 Nov 2010)

Molly Bloom said:


> economy, that we might be compelled to move to some 'higher' level of ECB rate (for sick economies, maybe including Greece, Portugal, etc)? Meaning a higher level of repayments for those with tracker mortgages?


 

"Sick" economies need lower interest rates, not higher ones.

Anyway, one currency = one int rate.


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