Negotiate negative equity with the bank?

Hi, I just want to run thru this situation by the experts.

I have an LTV tracker mortgage with NIB with about 260k outstanding. However the house is now almost certainly in negative equity at around 230-215k. I am considering selling at the moment.

Here's the tricky part where may be I am being overly optimistic and naive. I read somewhere that LTV mortgages like mine is hurting NIB as the intra-bank lending rates have gone up. So I guess closing my mortgage will be of interest to NIB as well. Is there any chance that NIB would look at this situation and may be write off that 20% difference for the benefit of closing a lose making contract?

Thanks a million for reading!

I would doubt it. I would also be reluctant to change from a tracker, as these are no longer available.... Do you really need to sell???

plausible said:

Here's the tricky part where may be I am being overly optimistic and naive. I read somewhere that LTV mortgages like mine is hurting NIB as the intra-bank lending rates have gone up. So I guess closing my mortgage will be of interest to NIB as well. Is there any chance that NIB would look at this situation and may be write off that 20% difference for the benefit of closing a lose making contract?

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At the height of the credit crunch, it was true that the banks were losing money on the trackers but not anymore. At the moment 3 month Euribor is around 0.7% while the best tracker at NIB is ECB + 0.5% i.e 1.5%. Putting it simply NIB can now borrow at 0.7% and lend at 1.5% so no longer losing money.

During the credit crunch 3m Euribor was higher than than the rate the banks could lend at hence they were losing money.

No chance of them writing off the 20% unfortunately.


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NorfBank said:

At the height of the credit crunch, it was true that the banks were losing money on the trackers but not anymore. At the moment 3 month Euribor is around 0.7% while the best tracker at NIB is ECB + 0.5% i.e 1.5%. Putting it simply NIB can now borrow at 0.7% and lend at 1.5% so no longer losing money.

Click to expand...

Would NIB get 0.7% though. I thought I read something about it being more expensive for Irish banks to lend because of their bad debt exposure.

pinkyBear, that's a very good question. I am still trying to figure it out myself, and the main reason for considering selling is because I recently got married and wife also has a property. This NIB mortgage has a clause to say that it has to be my PPR, and wife's mortgage also has a similar clause, and Revenue insists that a couple can only have one PPR (even if we use both houses). Her house is smaller but it also has a smaller mortgage, which I think she and I will be less worried about compared to this huge sum owed to NIB. Rest of the reasons borderlines future property prices, which I think we shouldn't be talking about in AAM..!

Thank you NorfBank and plant43. If NorfBank's right, that's the end of my little dream.

plant43 said:

Would NIB get 0.7% though. I thought I read something about it being more expensive for Irish banks to lend because of their bad debt exposure.

Click to expand...

Probably not, just trying to put it as simply as possible. Then again NIB isn't Irish.

Okay, thanks everyone! I won't think down this route again!