ECB cuts rate to 1.25%

fliball123

Welease wrote: »

But that's the point.. It's not a simple transaction.. because thats not how the financial system works..

Your (and my trackers) are costing the banks money.. It's a simple undisputable fact.. The reasons of who should accept the blame is a completely seperate and irrelevant issue..

http://www.moneybutler.ie/tracker-mortgages-costing-banks-money/

The shortfall in funding for tracker mortgages, will be bridged by higher variable rates, others charges, government funding etc.

But as someone else pointed out if there were no trackers ..the banks would be doing the same and regardless of how the financial system works..If I pay back what I got a lend of with interest (simple maths here) I am paying back more than I borrowed...so no one is subsidising my mortgage...whats being subsidised are decisions by the banks

Head The Wall

bryaner wrote: »

I'd say you've loads of friends..:rolleyes:

Incorrect and jealous, that makes me feel better

bamboozle

Head The Wall wrote: »

There's nothing to be cheering about really, yes it's a cut in what you're paying but it's still an overpriced mortgage in the majority of cases.


Will any of ye save more than the people like myself who have been saving the last few years and will get a house at a lot cheaper price, I think not. I have something to be happy about

eh yes there is, reduced ECB rate means more money in the pockets of Tracker Mortgage holders and variable mortgage holders for the banks who are passing the saving on.

the second point of your post is irrelevent to a drop in ECB rates (and quite petty)

bryaner

Head The Wall wrote: »

Incorrect and jealous, that makes me feel better

Jaysus I was right.

bryaner

bamboozle wrote: »

eh yes there is, reduced ECB rate means more money in the pockets of Tracker Mortgage holders and variable mortgage holders for the banks who are passing the saving on.

the second point of your post is irrelevent to a drop in ECB rates (and quite petty)

Well said.

SBWife

fliball123 wrote: »

Sorry is it my fault or any other trackers mortgagees fault the bank didnt figure this in...the bare facts are I am paying the full amount with interest so your not paying any of my mortgage..and if as you say I am stupid well why didnt you take the offer up when it was going.???? Did you have a Forest Gump moment?? try to be constructive in your posts..and show me how anyone else is subsidising my mortgage when I am paying back the full amount and interest to the bank?

No one said it was your fault. And where was it posted that I have a variable rate mortgage. Your mortgage is loss making and being subsidised, enjoy it, and keep up the payments you'd hate to give them any reason to move you off that rate.

fliball123

SBWife wrote: »

No one said it was your fault. And where was it posted that I have a variable rate mortgage. Your mortgage is loss making and being subsidised, enjoy it, and keep up the payments you'd hate to give them any reason to move you off that rate.

Once again my mortgage is not being subsidised..what is being subsidised are the bad decisions that the banks made...

Welease

fliball123 wrote: »

Once again my mortgage is not being subsidised..what is being subsidised are the bad decisions that the banks made...

Those bad decisions (and various other factors) have caused trackers to be underfunded...ergo.. in order for banks to balance their books those funds need to be subsidised by other funds (i.e. variable mortgages)..

This really isn't that complicated.

woodoo

Welease wrote: »

Those bad decisions (and various other factors) have caused trackers to be underfunded...ergo.. in order for banks to balance their books those funds need to be subsidised by other funds (i.e. variable mortgages)..

This really isn't that complicated.

Filiball has no history of taking any new info on board. I think he formed some opinions about 5 years ago and its impossible to move him away from them no matter how much sense is put his way.

Welease

woodoo wrote: »

Filiball has no history of taking any new info on board. I think he formed some opinions about 5 years ago and its impossible to move him away from them no matter how much sense is put his way.

I am not going to start throwing personal insults around, they won't help to develop any discussion..

I was trying to point out that when they called other posters opinions "uneducated stupid" that he/she was in fact incorrect..

However it does appear to be a complete waste of time.. Somewhat shocking considering the amount of available information on the problems trackers are causing Irish banks..

Head The Wall

bryaner wrote: »

Jaysus I was right.

Yes I am definitely jealous of people with mortgages, hold on that was directed at you

woodoo

Welease wrote: »

I am not going to start throwing personal insults around, they won't help to develop any discussion..

I was trying to point out that when they called other posters opinions "uneducated stupid" that he/she was in fact incorrect..

However it does appear to be a complete waste of time.. Somewhat shocking considering the amount of available information on the problems trackers are causing Irish banks..

It wasn't an insult. He is just supremely confident in his own point of view.;)

Madd Finn

Tazz T wrote: »

BTW, Madd Finn, I'm on a tracker and not a begrudger like you. I'm not subsidising your variable rate. The bank simply knows it can penalise you. You choose your service, you pay your price, matey! Don't blame me.

You're damn right you're not subsidising my variable rate. It's the other way round.

I'm not blaming you for it. Just stating a simple fact. People on variable rates are effectively subsidising those on trackers.

At the moment.

But that could change.

bryaner

Head The Wall wrote: »

Yes I am definitely jealous of people with mortgages, hold on that was directed at you

My god you really are like the spoilt brat in the playground, just to let you know I got my mortgage in 96 it's nearly finished and costing sfa now.

bamboozle

Madd Finn wrote: »

You're damn right you're not subsidising my variable rate. It's the other way round.

I'm not blaming you for it. Just stating a simple fact. People on variable rates are effectively subsidising those on trackers.

At the moment.

But that could change.

how could it change?

woodoo

Madd Finn wrote: »

You're damn right you're not subsidising my variable rate. It's the other way round.

I'm not blaming you for it. Just stating a simple fact. People on variable rates are effectively subsidising those on trackers.

At the moment.

But that could change.

Trackers were a thing of the past when i took out my mortgage. I'd have loved one.

Bruthal

bryaner wrote: »

Head The Wall wrote: »

Incorrect and jealous, that makes me feel better

Jaysus I was right.

Looks like it alright,

Bruthal

bamboozle wrote: »

Head The Wall wrote: »

There's nothing to be cheering about really, yes it's a cut in what you're paying but it's still an overpriced mortgage in the majority of cases.


Will any of ye save more than the people like myself who have been saving the last few years and will get a house at a lot cheaper price, I think not. I have something to be happy about

eh yes there is, reduced ECB rate means more money in the pockets of Tracker Mortgage holders and variable mortgage holders for the banks who are passing the saving on.

the second point of your post is irrelevent to a drop in ECB rates (and quite petty)

A but your saving from the rate change is smaller than Head The Wall`s, so yours, mine, and everyone elses is no good.

Where would ye hear the likes of that rubbish.

Id say everone in ireland is jealous of him/her

Head The Wall

Head The Wall wrote: »

Well considering I'll be looking for 50-70k over 10 years I reckon I'll be way better off in the long run. Six figure savings go a long way

And you've been living where for the last 10 years?

10 years of renting eats into that 6 figure sum you are babbling on about. Unless you live with Mummy and Daddy for free.

As with many folk who throw out the "I was too smart to buy during the boom ..." bla bla bla the reality is you were probably earning sh1t money in a sh1t job and couldn't afford it.

Also as with many of these type of genius' you will never have the balls to buy a house as you'll be afraid buying at the wrong time.

fliball123

woodoo wrote: »

Filiball has no history of taking any new info on board. I think he formed some opinions about 5 years ago and its impossible to move him away from them no matter how much sense is put his way.

Well let me ask you this show me where this money is that I am supposedly getting from the non tracker variable mortgage holders??

Let me ask you another question

When the bank gave me my tracker...do you think they intended to make a loss on it??? Answer obviously not...Otherwise they would not of given me the mortgage...
So what people who have non tracker variable mortgages are paying for are the following 2 things..

1: they are paying for decisions that the bank made after they gave me my mortgage...

2: they are paying for their own decision not to change to a tracker or to a fixed rate mortgage

So look at those 2 things and look at the people who made those decisions where they tracker mortgage holders no...it was yourselves and banks so go beat each other up

Bruthal

RoverJames wrote: »

And you've been living where for the last 10 years?

10 years of renting eats into that 6 figure sum you are babbling on about. Unless you live with Mummy and Daddy for free.

As with many folk who throw out the "I was too smart to buy during the boom ..." bla bla bla the reality is you were probably earning sh1t money in a sh1t job and couldn't afford it.

Also as with many of these type of genius' you will never have the balls to buy a house as you'll be afraid buying at the wrong time.

Id say that about sums it up. Plenty who didnt buy during the last 10 years didnt because they were not in a position to, and now they come forth with their genial claims.

Godge

SBWife wrote: »

Pot kettle black.

You are being subsidised if you have a tracker because the bank's cost of funds is higher than the interest rate you are being charged on your mortgage. The market for funds has changed in such a way that the margin above the ECB rate included in most tracker mortgage no longer covers the difference between the actual cost of funding for the banks and the ECB rate.

Being subsidised is the wrong word. the bank is making a loss at the moment on filiball's loan because the bank made a stupid business decision to lend him money at the ECB rate plus a small percentage.

And "at the moment" is the key thing. Let's say that the Euro runs into serious trouble in about a year's time. In order to protect it, the ECB puts rates up to 5 or 6% for a temporary. Filiball's tracker mortgage follows the ECB as it must but banks decide not to increase deposit or variable mortgage rates because they fear the effects on the economy. All of a sudden, the tracker mortgage doesn't look so good and to use your word, the tracker mortgage is "subsidising" the variable mortgage. Now that is an unlikely scenario at the moment but it could happen. Would you be leading the charge to let tracker mortgage holders switch to variable rates then? I think not.

Filiball made a business decision - took out a tracker mortgage on a house he thought he could afford. Head the Wall took a business decision - houses are too expensive, will save money. others took a business decision - bought an expensive house on a variable rate mortgage.

If inflation wipes out Head the Wall's savings - tough. If the ECB rate goes to 20% and filiball defaults and loses his house - tough. If others don't like their variable rate mortgage - tough. You all took business decisions, some of you poorly advised, poorly thought out or unlucky, others lucky, brilliantly thought out or negotiated but that is what business is about. There are ups and downs. And the ups and downs are not finished yet.

Anyone can see that we are not out of the crisis yet. I have spent the last few years paying down any debt other than mortgage debt (credit card, holiday loan, credit union loan, car loan which I stupidly took out in the good times) and they are mostly gone. The next step is to save some money in case the interest rate on my tracker mortgage (one of my good decisions) leaps up so I can pay off a lump sum on it (I can get more for saving now than I pay on the tracker rate). It has meant some serious lifestyle cutbacks (on top of the tax increases and everything else). It will look like a stupid business decision if the economy rebounds, taxes go back down and my pay rises but a good business decision if the bottom continues to fall out of the economy.

fliball123

Godge wrote: »

Being subsidised is the wrong word. the bank is making a loss at the moment on filiball's loan because the bank made a stupid business decision to lend him money at the ECB rate plus a small percentage.

And "at the moment" is the key thing. Let's say that the Euro runs into serious trouble in about a year's time. In order to protect it, the ECB puts rates up to 5 or 6% for a temporary. Filiball's tracker mortgage follows the ECB as it must but banks decide not to increase deposit or variable mortgage rates because they fear the effects on the economy. All of a sudden, the tracker mortgage doesn't look so good and to use your word, the tracker mortgage is "subsidising" the variable mortgage. Now that is an unlikely scenario at the moment but it could happen. Would you be leading the charge to let tracker mortgage holders switch to variable rates then? I think not.

Filiball made a business decision - took out a tracker mortgage on a house he thought he could afford. Head the Wall took a business decision - houses are too expensive, will save money. others took a business decision - bought an expensive house on a variable rate mortgage.

If inflation wipes out Head the Wall's savings - tough. If the ECB rate goes to 20% and filiball defaults and loses his house - tough. If others don't like their variable rate mortgage - tough. You all took business decisions, some of you poorly advised, poorly thought out or unlucky, others lucky, brilliantly thought out or negotiated but that is what business is about. There are ups and downs. And the ups and downs are not finished yet.

Anyone can see that we are not out of the crisis yet. I have spent the last few years paying down any debt other than mortgage debt (credit card, holiday loan, credit union loan, car loan which I stupidly took out in the good times) and they are mostly gone. The next step is to save some money in case the interest rate on my tracker mortgage (one of my good decisions) leaps up so I can pay off a lump sum on it (I can get more for saving now than I pay on the tracker rate). It has meant some serious lifestyle cutbacks (on top of the tax increases and everything else). It will look like a stupid business decision if the economy rebounds, taxes go back down and my pay rises but a good business decision if the bottom continues to fall out of the economy.

Could not have put it better Godge

Welease

fliball123 wrote: »

Well let me ask you this show me where this money is that I am supposedly getting from the non tracker variable mortgage holders??

Let me ask you another question

When the bank gave me my tracker...do you think they intended to make a loss on it??? Answer obviously not...Otherwise they would not of given me the mortgage...
So what people who have non tracker variable mortgages are paying for are the following 2 things..

1: they are paying for decisions that the bank made after they gave me my mortgage...

2: they are paying for their own decision not to change to a tracker or to a fixed rate mortgage

So look at those 2 things and look at the people who made those decisions where they tracker mortgage holders no...it was yourselves and banks so go beat each other up

I think you guys are just using different versions of the word "subsidised", and that is part of the confusion.. I am talking about banks making losses on trackers.

From your post you admit that the bank are making a loss on your tracker.. therefore (at present) you cannot be paying back the full cost of your mortgage.. If you were, then the bank could not and would not be making a loss on it.. therefore people are correct in using the particular term subsidised with regards to the bank balance sheets.

The trackers and other losses are being subsidised by a variety of methods, including the taxes you pay via the bank bailouts.. So your are likely also subsidising yourself via other means.

As with all things, no rates are set in stone and the situation can change in the future.

fliball123

Welease wrote: »

I think you guys are just using different versions of the word "subsidised", and that is part of the confusion.. I am talking about banks making losses on trackers.

From your post you admit that the bank are making a loss on your tracker.. therefore (at present) you cannot be paying back the full cost of your mortgage.. If you were, then the bank could not and would not be making a loss on it.. therefore people are correct in using the particular term subsidised with regards to the bank balance sheets.

The trackers and other losses are being subsidised by a variety of methods, including the taxes you pay via the bank bailouts.. So your are likely also subsidising yourself via other means.

As with all things, no rates are set in stone and the situation can change in the future.

Answer my 2 questions?

Welease

fliball123 wrote: »

Answer my 2 questions?

The answer to both is correct.. So what?

It doesn't change the fact that Trackers are currently making a loss for the banks, so your assessment that you are paying the full complete cost of your mortgage is currently incorrect..

fliball123

Welease wrote: »

The answer to both is correct.. So what?

It doesn't change the fact that Trackers are currently making a loss for the banks, so your assessment that you are paying the full complete cost of your mortgage is currently incorrect..

Yeap you said it is making a loss for the bank lets bold that...now did the tracker mortgage holders put a gun to the head of bankers telling them not to pass on interest rate cuts or to up the variable rate??? No

Welease

fliball123 wrote: »

Yeap you said it is making a loss for the bank lets bold that...now did the tracker mortgage holders put a gun to the head of bankers telling them not to pass on interest rate cuts or to up the variable rate??? No

Noone is discussing where the fault lies, and that has been clarified several times by several posters!.. So stop trying to divert.

You called the previous poster's comment stupid / uneducated...

fliball123 wrote: »

This kinda uneducated stupid comment drives me mad...how is anyone else subsidising a person with a tracker...

For example..

If I have a tracker and I owe 100 Euros and I pay back this 100 Euros with what ever interest then its obvious that I am subsidising my own mortgage to the full amount and paying interest

If the bank is making a loss on a tracker, then the tracker owner is not paying the full amount of the mortgage costs to the bank...

If you want to argue where the fault lies, then I suggest you post such....

bbsrs

Welease wrote: »

Those bad decisions (and various other factors) have caused trackers to be underfunded...ergo.. in order for banks to balance their books those funds need to be subsidised by other funds (i.e. variable mortgages)..

This really isn't that complicated.

Using the word Subsidised in this case is incorrect.
Anyway , because a business is making a loss on a bad contract it entered into you cannot say that another more prosperous contract it entered into is subsidisng the loss making one .they are separate contracts in their own rights . Thats what risk is all about good decisions and bad.Its the balance sheet at the end of the year that counts and in hard economic times the banks will turn the screw where ever they can to improve the balance sheets. If there were no trackers we would all be paying the maximum they could get away with charging . Do you think they would drop the variable rate in the morning if they were allowed to turn all trackers into variables , I think not .

bamboozle

bbsrs wrote: »

Using the word Subsidised in this case is incorrect.
Anyway , because a business is making a loss on a bad contract it entered into you cannot say that another more prosperous contract it entered into is subsidisng the loss making one .they are separate contracts in their own rights . Thats what risk is all about good decisions and bad.Its the balance sheet at the end of the year that counts and in hard economic times the banks will turn the screw where ever they can to improve the balance sheets. If there were no trackers we would all be paying the maximum they could get away with charging . Do you think they would drop the variable rate in the morning if they were allowed to turn all trackers into variables , I think not .

well explained.

unfortunately some people just have it in their heads that tracker mortgages are screwing variable mortgages and that's that.

Welease

bbsrs wrote: »

Using the word Subsidised in this case is incorrect.

Care to elaborate why?

A dictionary reference shows Subsidize as "pay part of the cost"..
In this case, it can be argued that in order to balance the banks books which is the primary focus of this government unfortunately, various alternatives (incl. variable mortgages, government funding etc.) are being used to "pay part of the costs" of bad decisions regarding development loans, mortgages etc.

Welease

bamboozle wrote: »

well explained.

unfortunately some people just have it in their heads that tracker mortgages are screwing variable mortgages and that's that.

I don't think thats the case at all..

Fliball is maintaining that they are funding 100% of the cost of their mortgage via their tracker payments. I am argueing that that is incorrect, and have show why..

Do you believe that a tracker owner is paying the full cost of their mortgage currently? (and as people seem to be getting bend out of shape, I am and have stated several times the owner of a tracker mortgage).

kippy

Yet again we appear to have a mentality of them and us, those on trackers and those on variables. There's a bit of a media storm portraying a "war" between both sets of people. Essentially blaming those on trackers for the higher variable rates.
I'm not sure where this image came from or what PR company working for what bank actually began this angle but it sure is working.

It's not the fault of those on trackers that the variable rates have and are going up.
Again it is the fault of the banks and probably more so the regulator or past regulator that the banks are in the state they are in now.

Banks are exceptionally good at crying when things don't suit them but one cannot blame those who have tracker mortgages for the banks woes. Those were business decisions taken at the time.
Were the tables turned I doubt very much those people on tracker mortgages paying 5-7 % would get "subsidised" by other mortgage payers or even any sympathy from the banks.

Either way, as I mentioned above, whatever people are "gaining" on trackers, they are getting well screwed for somewhere else.

bamboozle

Welease wrote: »

I don't think thats the case at all..

Fliball is maintaining that they are funding 100% of the cost of their mortgage via their tracker payments. I am argueing that that is incorrect, and have show why..

Do you believe that a tracker owner is paying the full cost of their mortgage currently? (and as people seem to be getting bend out of shape, I am and have stated several times the owner of a tracker mortgage).

yes, but i think you need to differentiate between the funding cost to the bank and the repayment cost to the mortgage holder, there's a big difference and all the mortgage holder of a tracker needs to care about is the cost to them.

however do i believe the banks are making a profit on tracker mortgages? no.

my mortgage is half tracker half variable per my contract, i'm paying my mortgage costs per the contract, unfortunately the bank are probably losing money on this contract.

bbsrs

Welease wrote: »

Care to elaborate why?

A dictionary reference shows Subsidize as "pay part of the cost"..
In this case, it can be argued that in order to balance the banks books which is the primary focus of this government unfortunately, various alternatives (incl. variable mortgages, government funding etc.) are being used to "pay part of the costs" of bad decisions regarding development loans, mortgages etc.

Balancing the books and subsidizing are two different things.

A subsidy would be a formal arrangement put in place to pay part of the cost of something like farming subsidies to subsidize the cost of producing food to make it a viable business for the producer and keep prices from fluctuating .

Balancing the book has to be done there is no choice unless you want to go out of business . You don't subsidise your losses with your profits you just absorb them and hope by maximising profits in your profitable ventures you can outweigh your unprofitable ones.

fliball123

Welease wrote: »

Noone is discussing where the fault lies, and that has been clarified several times by several posters!.. So stop trying to divert.

You called the previous poster's comment stupid / uneducated...



If the bank is making a loss on a tracker, then the tracker owner is not paying the full amount of the mortgage costs to the bank...

If you want to argue where the fault lies, then I suggest you post such....

what I am argueing is that I get a loan/mortgage which I will pay back in full with interest how is anyone else subsidising that loan...The reality is that you are subsidising decisions that the bank made after the the tracker mortgages option stopped....

fliball123

Welease wrote: »

I don't think thats the case at all..

Fliball is maintaining that they are funding 100% of the cost of their mortgage via their tracker payments. I am argueing that that is incorrect, and have show why..

Do you believe that a tracker owner is paying the full cost of their mortgage currently? (and as people seem to be getting bend out of shape, I am and have stated several times the owner of a tracker mortgage).

Where did I say that ???? I said I got a loan..I am paying back the amount 100% and I am paying interest...so no one is subsidising my mortgage...whatever the costs of this are , they are not down to my mortgage they are down to the bank so I maintain people on variable non trackers are subsidising actions that the banks have made

Godge

Welease wrote: »

I don't think thats the case at all..

Fliball is maintaining that they are funding 100% of the cost of their mortgage via their tracker payments. I am argueing that that is incorrect, and have show why..

Do you believe that a tracker owner is paying the full cost of their mortgage currently? (and as people seem to be getting bend out of shape, I am and have stated several times the owner of a tracker mortgage).

Strictly speaking filiball is correct. At the time that filiball took out his mortgage, the bank advanced money to whoever was selling the house to him. The bank was able to get this money at that point in time at a very cheap interbank rate, below the ECB rate. Therefore, it was making a clear profit on filiball. The bank paid a very low rate for that money and filiball is paying it back at a higher rate. He is therefore paying back the full 100% cost of the mortgage plus a profit to the bank.

The problem for the bank is that the interbank rate has gone above the ECB rate and the bank cannot get money as cheaply any more and it needs to pay a decent rate to depositers and funders which is more than
filiball is giving them back. Tough for the bank but that is a problem which is not filiball's.

Welease

bamboozle wrote: »

yes, but i think you need to differentiate between the funding cost to the bank and the repayment cost to the mortgage holder, there's a big difference and all the mortgage holder of a tracker needs to care about is the cost to them.

however do i believe the banks are making a profit on tracker mortgages? no.

my mortgage is half tracker half variable per my contract, i'm paying my mortgage costs per the contract, unfortunately the bank are probably losing money on this contract.

Exactly.. so therefore to go back the the point I was making to Fliball. and one they refuse to accept

fliball123 wrote: »

This kinda uneducated stupid comment drives me mad...how is anyone else subsidising a person with a tracker...

For example..

If I have a tracker and I owe 100 Euros and I pay back this 100 Euros with what ever interest then its obvious that I am subsidising my own mortgage to the full amount and paying interest...

Would you agree (that at present).. the above statement is incorrect?
If the bank is making a loss on trackers, it then the tracker owner cannot be paying the "full amount" irreprective of who said what, or who's fault it was..

fliball123

Welease wrote: »

Exactly.. so therefore to go back the the point I was making to Fliball. and one they refuse to accept



Would you agree (that at present).. the above statement is incorrect?
If the bank is making a loss on trackers, it then the tracker owner cannot be paying the "full amount" irreprective of who said what, or who's fault it was..

prove it to me..you show me how I am not paying the full amount plus interest on my mortgage???....show me where the money from variable rates are paying the money onto my mortgage

Actually answer this say the ECB ups its rates to 10% and all tracker are increased accordingly are you still subsidising my mortgage

Welease

bbsrs wrote: »

Balancing the books and subsidizing are two different things.

A subsidy would be a formal arrangement put in place to pay part of the cost of something like farming subsidies to subsidize the cost of producing food to make it a viable business for the producer and keep prices from fluctuating .

Balancing the book has to be done there is no choice unless you want to go out of business . You don't subsidise your losses with your profits you just absorb them and hope by maximising profits in your profitable ventures you can outweigh your unprofitable ones.

That was be one correct usage of the word subsidy... But is also has other similar common language usages..

We often will create a new business area with costs subsidised by the costs of more profitable areas in order to generate future business. I have never heard any balk at the use in that context in over 20 years in business...

Regarding common language usage.. here are a handful of articles that seem to have no issue with the term in various non governmental forms..

"Is it is grossly unfair and inequitable for one class of mortgage holder to effectively subsidise another as banks struggle to keep their doors open? Is there a case to be made for capping interest rate margins on variable rate annuity mortgages? "
http://journalist.ie/2011/07/disparity-amongst-mortgage-holders-unsustainable/

"The Agency also rejects the assertion that holders of tracker mortgages are being unfairly cross subsidised, to the detriment of consumers with variable rates. It believes that consumers who signed up to a tracker rate are entitled to be assured that their lender will fulfil the contract they signed up to. "
http://www.nca.ie/eng/Media_Zone/Press%20Releases/NCA%20warning%20on%20switch%20to%20fixed-rate%20mortgages.html

"The national solidarity bond has been criticised as a “lapse-supported” product. In other words, the investors who bail out within the first five years and end up with a small return after tax end up subsidising the returns for the very few who will stick it out for seven to 10 years."
http://www.todayfm.com/Shows/Weekdays/Matt-Cooper/Personalfinance.aspx

"Your new lender may offer to subsidise some of these costs or even absorb all of them, though one condition may be that you have to use one of the lender's own recommended solicitors."
http://www.consumerconnect.ie/eng/Hot_Topics/ConsumerValue/Housing/switching-mortgages.html

etc etc etc..

The term subsidy is and can be used in far more cases than just formal governmental agreements / payments.

(and yes I am aware that the National Consumer Agency linked above disagree with tracker mortages being blames for bank issues.. )

monkeypants

Madd Finn wrote: »

We'll be subsidising those tracker bustards for some time to come!:mad:

When I bought, I took a fixed rate for a couple of years. So when everyone else was paying 2.x%, I was handing over 4.79%.

Welease

fliball123 wrote: »

prove it to me..you show me how I am not paying the full amount plus interest on my mortgage???....show me where the money from variable rates are paying the money onto my mortgage

Actually answer this say the ECB ups its rates to 10% and all tracker are increased accordingly are you still subsidising my mortgage

I have already provided you with links that demonstrate banks are losing money on tracker mortgages. (linked some more below)

If you want to dispute that.. then why don't provide an equivalent level of links or data which backup you claim?

http://www.herald.ie/opinion/columnists/dan-white/dan-white-keep-a-hold-of-that-tracker-mortgage-it-could-save-you-euro100k-2163665.html
http://www.moneybutler.ie/tracker-mortgages-costing-banks-money/
http://icampaigned.com/blog/2011/04/tracker-mortgages-in-2011/
http://www.eumom.ie/blog/2011/03/23/banks-to-pay-you-to-come-off-a-tracker/
http://www.rte.ie/tv/fourlive/2011/0404/trackermortgages126.html
http://www.rte.ie/news/2011/0418/mortgages.html

I await something which backs up you claim of full payment....

(your question is an irrelevance until we hit 10%, then your claim may or may not be correct... for now.. rates are not at 10% so it doesnt effect your claim of full payment)

Head The Wall

RoverJames wrote: »

And you've been living where for the last 10 years?

10 years of renting eats into that 6 figure sum you are babbling on about. Unless you live with Mummy and Daddy for free.

Ah yes the rent is dead money idea. It has been picked apart numerous times but still some fools believe it. have a read of this link from Ronan Lyons explaining it to you.

A nation of renters once again - Revisiting rent or buy

And what do you mean renting eats into that six figure sum, we have that saved after paying for rent and I haven't lived at home for 15 years.

RoverJames wrote: »

As with many folk who throw out the "I was too smart to buy during the boom ..." bla bla bla the reality is you were probably earning sh1t money in a sh1t job and couldn't afford it.

Also as with many of these type of genius' you will never have the balls to buy a house as you'll be afraid buying at the wrong time.

Look it sounds like you are in denial, you and others don't want to accept that some people didn't get sucked in to the boom and you vilify and denounce people like myself that saved as "must have a crap job" and didn't have the opportunity to buy.

I'm an IT college graduate (1996) and have worked all my life in professional jobs bar a few months last year so I'm sorry if I don't fit your "stereotype" of not being able to get onto the ladder. I simply decided not to go down that road, it wasn't a difficult choice to make.

1 - House prices increasing 600-800% over ten years.
2 - The quality of houses being built (crap)
3 - Everyone was suddenly a builder/tradesman even without the requisite experience.
4 - People camping overnight to buy houses of plans.

It was complete and utter madness and anyone that says otherwise is foolish.

Put me down if you want, if it makes you feel better about the decisions you made. I can't think of any other reason someone would be giving out for someone being sensible other than that person regrets that they didn't make the choice I and others have

robbie7730 wrote: »

Id say that about sums it up. Plenty who didnt buy during the last 10 years didnt because they were not in a position to, and now they come forth with their genial claims.

Maybe people should take a look at how much interest they will pay on a 300,000 mortgage over 35 years and compare it to how much interest is paid on 70,000 over 10 years. Tell me then how people buying in the future will be worse off.

Godge

Welease wrote: »

I have already provided you with links that demonstrate banks are losing money on tracker mortgages. (linked some more below)

If you want to dispute that.. then why don't provide an equivalent level of links or data which backup you claim?

http://www.herald.ie/opinion/columnists/dan-white/dan-white-keep-a-hold-of-that-tracker-mortgage-it-could-save-you-euro100k-2163665.html
http://www.moneybutler.ie/tracker-mortgages-costing-banks-money/
http://icampaigned.com/blog/2011/04/tracker-mortgages-in-2011/
http://www.eumom.ie/blog/2011/03/23/banks-to-pay-you-to-come-off-a-tracker/
http://www.rte.ie/tv/fourlive/2011/0404/trackermortgages126.html
http://www.rte.ie/news/2011/0418/mortgages.html

I await something which backs up you claim of full payment....

(your question is an irrelevance until we hit 10%, then your claim may or may not be correct... for now.. rates are not at 10% so it doesnt effect your claim of full payment)

Since you keep asking how filiball is fully paying back his mortgage, you may have missed my post.

Godge wrote: »

Strictly speaking filiball is correct. At the time that filiball took out his mortgage, the bank advanced money to whoever was selling the house to him. The bank was able to get this money at that point in time at a very cheap interbank rate, below the ECB rate. Therefore, it was making a clear profit on filiball. The bank paid a very low rate for that money and filiball is paying it back at a higher rate. He is therefore paying back the full 100% cost of the mortgage plus a profit to the bank.

The problem for the bank is that the interbank rate has gone above the ECB rate and the bank cannot get money as cheaply any more and it needs to pay a decent rate to depositers and funders which is more than
filiball is giving them back. Tough for the bank but that is a problem which is not filiball's.

The banks are not funding the money they advanced to filiball, they did that when they paid for his house, they are funding other things such as depositers and bondholders that are more expensive now than when they got the money to pay for filiball's house. Most of those links you provide also miss this point. They paid for filiball's house a few years ago.

Welease

Godge wrote: »

Strictly speaking filiball is correct. At the time that filiball took out his mortgage, the bank advanced money to whoever was selling the house to him. The bank was able to get this money at that point in time at a very cheap interbank rate, below the ECB rate. Therefore, it was making a clear profit on filiball. The bank paid a very low rate for that money and filiball is paying it back at a higher rate. He is therefore paying back the full 100% cost of the mortgage plus a profit to the bank.

The problem for the bank is that the interbank rate has gone above the ECB rate and the bank cannot get money as cheaply any more and it needs to pay a decent rate to depositers and funders which is more than
filiball is giving them back. Tough for the bank but that is a problem which is not filiball's.

Of course it's not Fliballs problem (nor mine or anyone else on a trackers).. noone claimed it was..

You first statement is correct, and would hold completely true if the bank funding was a snapshot in time which never had variables, but the second part of your post talks about some of those variables, which as you state have changed, and therefore as we know trackers have started to cost banks money..

Yes, it can be argued (as you are) that in isolation (or strictly speaking as you put it) the statement was correct, but that requires the us to ignore that bank funding doesn't work in isolation, it works using a combinations of loans, deposits etc. all of which make up the "actual" cost of a mortage not the "contractual" cost of the mortgage to the tracker owner. Fliball is not meeting the "actual" cost of the mortage (or is very unlikely to be), therefore (over to the other can of worms), other funding streams are subsidizing the cost of tracker mortgages so the banks can balance their books.

Is there a problem with subsidizing? Not to me. It's a standard part of business and it works otherwise we would have no innovation or new business, and in trackers one that I benefit from. But that doesn't mean that I am meeting the "actual" cost of my mortgage.

Make sense?

Welease

Godge wrote: »

Since you keep asking how filiball is fully paying back his mortgage, you may have missed my post.




The banks are not funding the money they advanced to filiball, they did that when they paid for his house, they are funding other things such as depositers and bondholders that are more expensive now than when they got the money to pay for filiball's house. Most of those links you provide also miss this point. They paid for filiball's houseo. a few years ag

Sorry have responded..

Thats the point i am making

"They paid for filiball's houseo. a few years ago"

They did, but he didn't.. and THAT current cost is more than he is paying.. hence why banks are losing money.. Fliball hasn't paid 100% for anything yet..

Madd Finn

bamboozle wrote: »

how could it change?

Read Godge's post No 73.

Or if that's too long:

In the usual run of events, banks are not obliged to adjust their interest rates in line with those of the ECB. They calculate what they will do based on the conflicting needs to maximise their own profits and remain competitive against other banks.

Because of the existence of tracker mortgages, their choices are further circumscribed. They cannot choose to adjust their own rates downwards for all lenders by amount x because they are obliged to adjust their rates downwards by amount y, (the amount agreed in the tracker contract and which is probably larger than x) for their tracker customers.

So in that sense, variable rate customers are paying more than they would need to if there were no trackers and therefore it IS fair to say they are subsidising those on trackers.

If and when (see Godge) ECB rates rise, tracker customers will be forced to endure the agreed rises. But given the fierce competition among banks they may decide not to raise rates for everyone. In which case, tracker customers will then effectively be subsidising those on variables.

Swings and roundabouts.

Gumbo

Head The Wall wrote: »

Ah yes the rent is dead money idea. It has been picked apart numerous times but still some fools believe it. have a read of this link from Ronan Lyons explaining it to you.

A nation of renters once again - Revisiting rent or buy

And what do you mean renting eats into that six figure sum, we have that saved after paying for rent and I haven't lived at home for 15 years.




Look it sounds like you are in denial, you and others don't want to accept that some people didn't get sucked in to the boom and you vilify and denounce people like myself that saved as "must have a crap job" and didn't have the opportunity to buy.

I'm an IT college graduate (1996) and have worked all my life in professional jobs bar a few months last year so I'm sorry if I don't fit your "stereotype" of not being able to get onto the ladder. I simply decided not to go down that road, it wasn't a difficult choice to make.

1 - House prices increasing 600-800% over ten years.
2 - The quality of houses being built (crap)
3 - Everyone was suddenly a builder/tradesman even without the requisite experience.
4 - People camping overnight to buy houses of plans.

It was complete and utter madness and anyone that says otherwise is foolish.

Put me down if you want, if it makes you feel better about the decisions you made. I can't think of any other reason someone would be giving out for someone being sensible other than that person regrets that they didn't make the choice I and others have



Maybe people should take a look at how much interest they will pay on a 300,000 mortgage over 35 years and compare it to how much interest is paid on 70,000 over 10 years. Tell me then how people buying in the future will be worse off.

as i said before, i'd like to see the calulations to see how much ebtter of you would be. Youve got to add in the cost of that rent youve been paying for 15 years into the calculations also.

could be an interesting analysis.

bbsrs

Welease wrote: »

That was be one correct usage of the word subsidy... But is also has other similar common language usages..

We often will create a new business area with costs subsidised by the costs of more profitable areas in order to generate future business. I have never heard any balk at the use in that context in over 20 years in business...

Regarding common language usage.. here are a handful of articles that seem to have no issue with the term in various non governmental forms..

"Is it is grossly unfair and inequitable for one class of mortgage holder to effectively subsidise another as banks struggle to keep their doors open? Is there a case to be made for capping interest rate margins on variable rate annuity mortgages? "
http://journalist.ie/2011/07/disparity-amongst-mortgage-holders-unsustainable/

"The Agency also rejects the assertion that holders of tracker mortgages are being unfairly cross subsidised, to the detriment of consumers with variable rates. It believes that consumers who signed up to a tracker rate are entitled to be assured that their lender will fulfil the contract they signed up to. "
http://www.nca.ie/eng/Media_Zone/Press%20Releases/NCA%20warning%20on%20switch%20to%20fixed-rate%20mortgages.html

"The national solidarity bond has been criticised as a “lapse-supported” product. In other words, the investors who bail out within the first five years and end up with a small return after tax end up subsidising the returns for the very few who will stick it out for seven to 10 years."
http://www.todayfm.com/Shows/Weekdays/Matt-Cooper/Personalfinance.aspx

"Your new lender may offer to subsidise some of these costs or even absorb all of them, though one condition may be that you have to use one of the lender's own recommended solicitors."
http://www.consumerconnect.ie/eng/Hot_Topics/ConsumerValue/Housing/switching-mortgages.html

etc etc etc..

The term subsidy is and can be used in far more cases than just formal governmental agreements / payments.

(and yes I am aware that the National Consumer Agency linked above disagree with tracker mortages being blames for bank issues.. )

They're all using it in the wrong context too.:) Anyways most people get what is meant when you suggest variable rate mortgages are subsidizing trackers , I still say its not subsidizing just simple business procedure . The banks are the ones to be annoyed with no the ordinary home owner who happens to have a tracker.