AIB Pulls Tracker Mortgages for New Business

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marksa

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AIB has sounded the death knell for sales of ECB tracking mortgages...
http://www.independent.ie/business/...cker-mortgages-as-aib-pulls-plug-1496188.html

This just leaves NIB, and how long will they continue to offer the product when the spread between ECB (3.75%) and 3 Month Euribor (5.38%) is 1.63%? At an LTV of <50% their offer of 0.90% is a loss-maker by 0.73%.

As you can see from the attached link -
http://www.euribor.org/html/download/euribor_2008B.xls
EURIBOR rates stay stubbornly high even after ECB cut as no bank is willing to lend to another at the moment. As long as this persists, no bank will commit to ECB tracker lending.

Alternatives will now be Fixed Rate or SVR. If fixed rates continue to fall in the short-term, then they may offer better medium term value and certainty than SVR where a bank can change the rate as and when it likes.
 
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None of the announcements affect customers with existing tracker mortgages, so 'death knell' is a bit melodramatic surely?
 
Most trackers have get out clauses where they can switch to tracking the higher euribor rate.
 
bond-007 said:
Most trackers have get out clauses where they can switch to tracking the higher euribor rate.
Click to expand...

Is this a standard "get-out clause" or something they introduced since the credit crunch?

My current loan offer has this clause in it, and it essentially makes my mortgage a EURIBOR tracker, instead of an ECB tracker. I'm trying to decide whether to accept it or not (EURIBOR=4.6%, ECB=3.75%)
 
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