- This topic has 4 replies, 3 voices, and was last updated 11 years, 1 month ago by
.
-
Posts
-
New government and central bank plans to tackle mortgage arrears announced yesterday. In short, the banks will be set targets to put "sustainable" plans in place with distressed borrowers. Inevitably, it will lead to an increase in repossessions but for some, this will be welcome where the negative equity portion is written off, leaving them to start fresh without the debt burden. Lets hope they get it right and make a real difference to those that need it!.
They are talking about this on Ray D’Arcy show now, its interesting but still a bit confusing.
for e.g. we are on a tracker mortgage and they are saying the banks will try to get us off that – they do not want people on tracker mortgages, they cost the banks money.
there is talk of writing down mortgages, split mortgages and increased reposessions.
Dave FC – what do you think??
The bit about Tracker rates is where an arrangement would suit a distressed borrower better in the long run, Sabbi. For example, someone on a tracker who has a mortgage of €300,000 on a house that is now worth about €150,000, if the bank deemed it appropriate to "write off" the negative equity portion of the mortgage, bringing it down to a manageable €150,000, putting that person on a standard variable or fixed rate would be more beneficial than staying on the tracker on the higher amount, giving them a chance to get back on track.
Reposessions will likely increase as a drive to deal with cases increases but for some, this could be a welcome option. I spoke to someone yesterday who owes over €320,000 and said a similar house nearby recently sold for under €115,000. She would happily let the bank take the house if she was not left with the balance as a debt. Similarly, if they split the mortgage, letting her pay for the portion equal to the house value and either "parked" the balance for the future or else took an equity stake in the house (if she sold a few years down the road the bank could get their share at that point).
But isn’t the variable rate 5% whereas the tracker rate we are on is 1.7% so it would have to be some write down to make it worth while. Can someone demand to be put on a fixed rate because today they were suggesting if someone comes off a tracker, they have to go on variable and that could put the borrower back in a bad place if the rates go up?
What do you think about split mortgages Dave? Is it a good idea?
The fine tune options will still have to be decided on and it could differ from bank to bank.
In terms of the split mortgages, if, for example, they parked the negative portion of a mortgage with 0% interest (whether to be dealt with in the future if possible or else give the bank a stake in the house itself) this could free up disposable income for the borrowers, allowing them to "live" again and any spending as a result of additional disposable income will lead to increased jobs, increased revenue and reduced social welfare bills as a result of the increased jobs, so it could be a very beneficial move overall.
- You must be logged in to reply to this topic.