The Cental Bank's attitude to negative equity mortgages

[Brendan Burgess]

The purpose of this thread is to document the practices of the different banks.Argue the merits and demerits of negatice equity mortgages at "Why do the banks not do negative equity mortgages?" Brendan Burgess

I got this response from the Central Bank

The Central Bank wrote to all mortgage lenders last year seeking information and requesting them to stop writing negative equity mortgage products. We intervened because there were concerns about the negative effects of such products and we wanted to examine the impact of such products on borrowers regarding affordability and the risk lenders may be taking in offering such products.

We undertook an examination of the merits of these products with a view to consumer protection and concluded that such products should only be made available to consumers in very limited circumstances and in accordance with strict criteria and having appropriate controls in place. Any lender planning to provide such products must notify the Central Bank in advance to ensure that appropriate measures and controls are taken as such a product may lead to the potential of consumers being over exposed or facing future repayment difficulties.

 

[Brendan Burgess]

On 17 April Niall Brady had an article in the Sunday Times which added the following

Many will face an interest rate shock as they will give up their cheap tracker mortgage

The Central Bank will not allow the mortgages "to be actively promoted or advertised"

Lenders must get prior approval from the Central Bank including agreement for the maximum amount of debt relative to borrowers incomes and the value of their homes.

Bank of Ireland intends to offer them.
PTSB says they are under review
AIB, EBS and Ulster say they have no plans

 

[Brendan Burgess]

I understand that Bank of Ireland is already offering them on a case by case basis.

Dave Guinnane of PTSB said on Morning Ireland this morning that there would not be a negative equity product, but that there would be a "process". By which I assume he means that they will offer them on a very limited basis.

 

[McNulty]

As you know I'm particularly interested in the PTSB options. My plan down the line (if interest only is not on offer and renting proves unpractical) would be to see if they will let me put it on the market, and take the shortfall at the current tracker rate, over the same period. The immediate complications I can see are that once the house is sold and I'm not planning on buying another property in the state, it becomes unsecured, so it's not a mortgage I guess? Interesting to see how they deal with this as part of it.

 

[Turdus]

On 17 April Niall Brady had an article in the Sunday Times which added the following:

Quote:
Bank of Ireland intends to offer them

ICS is part of Bank of Ireland's group. Do you know whether they would adopt BOI's policies on this?

Thanks