Bank of Ireland have contracted a market research company to run a series of focus groups with some of their existing tracker customers. They’re pitching a few ‘trade up’ options. All involve selling your current property, buying a new one, the possibility to carry a chunk of negative equity but you must stump up at least 10% of the purchase price for the new property in cash.
They’ve proposed options where you keep a tracker of sorts for a capital amount equivalent to that of your outstanding tracker balance for 3, 5 or 7 years, reverting to SVR or the available fixed rates after that period with the balance financed at SVR or current fixed rates from the off.
For the 3 year option, you keep your tracker rate; the 5 year, your tracker rate +1%; the 7 year, your tracker rate +1.5%.
So, eh, would you?
[Disclosure: I have no connection with the market research company, or with BOI other than as a customer.]
How about BOI cut a deal whereby they split the difference (the amount they are loosing per month on the trackers) in return for a capital repayment incentive eg for every 10K you over pay your mortgagee they will take 12K off your capital.
Its win win. The customer benefits and the bank benefits by loosing less money instead of this convoluted crap to get people over to their SVR
They no doubt only really want to entertain lower risk customers, this helps to filter the applicants. No reason to use savings to pay down your negative equity when its financed @2% or less and you’ve no problem paying it down to schedule with your current expenditure.
One additional fact… You have a max 6 month window between selling and buying, could prove a bigger challenge than finance to close your sale and close on something you really want to buy in that window.
If I want to move it makes more sense to rent a new place and rent out my current PPR, given current Dublin prices, although I don’t know whether that would go against Ts & Cs.
I’d be prepared to switch to a different tracker rate or SVR if they discounted the outstanding principal substantially. That would probably get me out of negative equity and thus enable me to get a new SVR on top to move.
Basically I see trackers the same as other inept loans the banks made. They can either sit on a non-performing loan and bleed money or realize the loss.