They kept their default variable rates artificially high. So while you could fix with ptsb or BoI at 3%, when the fixed rate ended you defaulted to variable rates of up to 4.5%. You could usually fix again at 3%, but a lot of people didn't.
So the vulture funds are adding the ECB rate increases to an artificially high variable rate.
I think that the appropriate comparison for this thread is the rates being paid by customers of vulture funds with the rates in the rest of the eurozone.
The " Vultures " bought the Mortgage Portfolios at a massive discount so even allowing for market conditions they are still charging way over the top in terms of interest , I was told on very reliable authority that Start bought the Project Glas Portfoilio for a 38% discount so even charging zero interest they stand to make big money .The so-called "vulture banks" are in a somewhat different situation to the mainstream banks, I would have thought.
The mainstreams are crammed full of customer deposits at the moment, on which they are paying almost no interest. They are using these to cover their lending/mortgages. The "vultures" do not have a deposit base and are dependent on market funding - and hence are more closely linked to the rising ECB rate.
Start bought the Project Glas Portfoilio for a 38% discount so even charging zero interest they stand to make big money .
So firstly, this issue does not impact on all mortgage holders with a vulture fund. It impacts those who had a fixed rate with a high street bank and doesn't impact to the same degree, those who had a tracker or variable rate mortgage.?Hi Dad
Unfortunately, that is a common misunderstanding of the situation - share by the Central Bank and the Government. "The vultures have just put up rates in line with the increases in ECB rates - so what is the problem?"
The Irish banks competed for business on fixed rates. They kept their default variable rates artificially high. So while you could fix with ptsb or BoI at 3%, when the fixed rate ended you defaulted to variable rates of up to 4.5%. You could usually fix again at 3%, but a lot of people didn't.
So the vulture funds are adding the ECB rate increases to an artificially high variable rate.
Even if you were a switched-on customer and had fixed at 3%, now that your fixed rate is ending and your mortgage has been sold to a vulture fund, your mortgage rate is now up to 7.5%.
Brendan
It impacts those who had a fixed rate with a high street bank and doesn't impact to the same degree, those who had a tracker or variable rate mortgage.?
high street bank rates are still significantly cheaper then in the UK as an example where the average standard variable rate is 7.74%
Vulture funds have also taken on additional risks given the significant difficulties in recovering the security of a loan that defaults in Ireland and I would have thought that has been factored into their thinking
They are now paying 3.5% on top of the artificially high rate.
PTSB told blatant lies , our Mortgage had been restructured and performing and we had no other loans leveraged on our home so absolute no reason for putting us into the Project Glas Sale other than bulking it up with performing mortgages to make up for the dross which will end up in the courts .Given the extraordinary difficulty and time delay in securing collateral in cases of default or non-engagement in this country, I very much doubt that that they could make any money "charging zero interest" on the Project Glas portfolio :
"PTSB said of the 7,400 owner-occupier mortgages, 2,500 of those accounts are classified as "not co-operating", adding a further 3,850 accounts have either "refused treatments" or "the account has failed to operate in line with the agreed 'Treatment'".
Project Glas also includes 3,300 buy-to-let properties." (RTE 31 July 2018)
That is not withstanding these unfortunates who were included in the portfolio (and without whom the write down would have been undoubtedly larger):
"Last month, the bank confirmed that 1,050 loans on family homes, which are performing or meeting the terms of an agreed restructuring arrangement, are included in those being sold to Lone Star.
The bank said they were included in the sale because the borrowers have other loans which are in arrears." (RTE 2 Oct 2018)
our Mortgage had been restructured and performing
There was no Split , the Arrears had been fully Capitalised and no other loans with PTSB so the excuse of " other arrears " did not exist . I believe others had found themselves in a similar position .HI Cork Home
ptsb did not want to sell your mortgage but they were forced to by the Central Bank.
If it was a split mortgage or a mortgage where there would be a balance at the end of the term, the CB deemed it non performing.
Brendan
Vultures are under no obligation to offer fixed rates to anyone and if they were, the price they would have paid the banks for the loans books would have been different. After all, PTSB could turn around tomorrow and say there were making a business decision to only offer variable rates in the same way banks don't offer trackers anymore.Again, you fail to fully understand the issue. And this is the problem I have in trying to explain it to the Central Bank or the Dept of Finance. "all they are doing is passing on interest rate increases."
Tracker mortgage holders - They have lost the ability to fix their mortgage rate. A ptsb customer could have fixed at 3% but the vultures don't offer fixed rates.
Non-tracker variables. Are fully impacted. They were usually on artificially high rates. They are now paying 3.5% on top of the artificially high rate.
Brendan
I think the issue here is that the customers are prevented from switching to another provider.I dont want to be upsetting anyone. There is nothing worse than been under genuine financial pressure be it from any angle. I remember paying an interest rate of 13.95% many years back. It was awful but I had to suck it up and take on extra work to make the payments.
Taking on a mortgage is a serious undertaking. Rates have been much much higher a lot of the years.
If anybody expects the government/tax payer to step in each and every time rates rise they are sadly in for a shock. It simply will not happen.
Could be wrong, but capitalised arrears still fall into the restructured category and thus considered "arrears"? (Depending on the actual arrangement, but unless a reduced interest rate was applied this technically should have made your loan even more profitable?) I know from reading a CB paper on the topic of interest only yesterday that even performing loans that were recapitalised are still regarded as arrears because they are not in line with original agreement.There was no Split , the Arrears had been fully Capitalised and no other loans with PTSB so the excuse of " other arrears " did not exist . I believe others had found themselves in a similar position .
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