Gordon Gekko
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More bizarre stuff in the mortgage lending space...
If you have an investment property on a tracker mortgage, certain banks (e.g. BOI) will apply their own investment mortgage rate (e.g. 5.5% for BOI) and then stress test it by 2%.
So a prospective borrower with BOI ends up with a notional loan at 7.5%. It's like stress testing a Ford Focus driver based on the monthly fuel cost of driving a Hummer.
And apparently, the Central Bank and Department of Finance were unaware of the practice until recently!
If you have an investment property on a tracker mortgage, certain banks (e.g. BOI) will apply their own investment mortgage rate (e.g. 5.5% for BOI) and then stress test it by 2%.
So a prospective borrower with BOI ends up with a notional loan at 7.5%. It's like stress testing a Ford Focus driver based on the monthly fuel cost of driving a Hummer.
And apparently, the Central Bank and Department of Finance were unaware of the practice until recently!