Tracker levy

valor rorghulis

I'm not an expert and just thinking out loud here, whilst I know this is controversial I'd like to see what others think.

We have a situation where thousands of people are benefiting hugely from having cheap tracker rates on their mortgages, due to the ECB .05 interest rate.

This means the banks are losing money on them, and to remain viable have to charge more on variable and fixed rate mortgages.

Normally this would be fine, however many of our banks are state owned, so it basically means the taxpayer is contributing toward the mortgages of those with tracker rates.

Tenants have to pay USC, and first time buyers and those on fixed/variable rates pay USC AND higher interest rates so that AIB and PTSB (both state owned) don't go bust due to losing money to those with tracker rates. Also some state ownership of BOI, though this is a bit different given they are now profitable.

I don't think this is fair, therefore I think the government should consider a tracker levy on those with unprofitable mortgages. When the ECB increase rates to sane levels this would obviously disappear.

Taxburden carrier

valor rorghulis wrote: »

I'm not an expert and just thinking out loud here, whilst I know this is controversial I'd like to see what others think.

We have a situation where thousands of people are benefiting hugely from having cheap tracker rates on their mortgages, due to the ECB .05 interest rate.

This means the banks are losing money on them, and to remain viable have to charge more on variable and fixed rate mortgages.

Normally this would be fine, however many of our banks are state owned, so it basically means the taxpayer is contributing toward the mortgages of those with tracker rates.

Tenants have to pay USC, and first time buyers and those on fixed/variable rates pay USC AND higher interest rates so that AIB and PTSB (both state owned) don't go bust due to losing money to those with tracker rates. Also some state ownership of BOI, though this is a bit different given they are now profitable.

I don't think this is fair, therefore I think the government should consider a tracker levy on those with unprofitable mortgages. When the ECB increase rates to sane levels this would obviously disappear.

Are you going to factor in negative equity , saleability and job security into your proposed levy OP ?

Rightwing

valor rorghulis wrote: »

I'm not an expert and just thinking out loud here, whilst I know this is controversial I'd like to see what others think.

We have a situation where thousands of people are benefiting hugely from having cheap tracker rates on their mortgages, due to the ECB .05 interest rate.

This means the banks are losing money on them, and to remain viable have to charge more on variable and fixed rate mortgages.

Normally this would be fine, however many of our banks are state owned, so it basically means the taxpayer is contributing toward the mortgages of those with tracker rates.

Tenants have to pay USC, and first time buyers and those on fixed/variable rates pay USC AND higher interest rates so that AIB and PTSB (both state owned) don't go bust due to losing money to those with tracker rates. Also some state ownership of BOI, though this is a bit different given they are now profitable.

I don't think this is fair, therefore I think the government should consider a tracker levy on those with unprofitable mortgages. When the ECB increase rates to sane levels this would obviously disappear.

I'm surprised they haven't thought of this already, the only thing I can assume is many politicians have trackers.

hfallada

Rightwing wrote: »

I'm surprised they haven't thought of this already, the only thing I can assume is many politicians have trackers.

Because it's a horrific idea. Why should people who made the smart financial choice of getting a tracker be punished? Should have a levy on people who choose mortgages that give them a higher return than average? The answer is no.

A majority of banks arent state owned and most trackers are in privately owned banks like ulster banks. Getting involved with mortgages will only cause distrust among people regarding finances. Which is the worst. What will stop people thinking if the government gets involved with mortgages. What will stop them getting involved with savings and taking a chunk of their savings

Rightwing

hfallada wrote: »

Because it's a horrific idea. Why should people who made the smart financial choice of getting a tracker be punished? Should have a levy on people who choose mortgages that give them a higher return than average? The answer is no.

A majority of banks arent state owned and most trackers are in privately owned banks like ulster banks. Getting involved with mortgages will only cause distrust among people regarding finances. Which is the worst. What will stop people thinking if the government gets involved with mortgages. What will stop them getting involved with savings and taking a chunk of their savings

We're dealing with Govt here, hence you'd expect horrific ideas, such as taxing 07/08 diesel cars at different rates.

Doom

What about people who paid huge stamp duty (30k) and now also have to pay property tax....that's just as unfair.

Op, why not put a levy on people who didn't buy houses at all, sure they're getting away with practical murder...
Not really a good idea op.

ArmaniJeanss

I went on a +1.05 tracker (when ecb rates were 2% so 3.05 total initially) when there was better shortterm offers available (e.g., 2 or 3 years fixed at 2% or 2.5% then onto variable).

Not really sure why you think I should have to pay a penalty for making a non-greedy choice which turned out to be correct.

If they are making such a loss, why don't the banks make an offer to owners of tracker mortgages to pay off their mortgage at a big discount.
You can't penalize people for making sound financial decisions.

crusier

Yeah! Hammer the small man again! Great idea OP. I ****ing hate begrudgers!

gandalf

Why should I pay a penalty for shopping around and getting the best deal that I could?

Bear in mind if the ECB rate flies up then those of us on Trackers will get hammered first.

Also I have made a major loss on the property I bought based on the cost I paid with the value of the property today. I'd expect to be able to make a claim over 10 years against my taxes based on the losses if they attempted to bring in any charge of this type.

Calibos

http://www.independent.ie/business/personal-finance/property-mortgages/new-hope-for-borrowers-in-variable-rate-nightmare-30991510.html

gaius c

valor rorghulis wrote: »

I'm not an expert and just thinking out loud here, whilst I know this is controversial I'd like to see what others think.

We have a situation where thousands of people are benefiting hugely from having cheap tracker rates on their mortgages, due to the ECB .05 interest rate.

This means the banks are losing money on them, and to remain viable have to charge more on variable and fixed rate mortgages.

Normally this would be fine, however many of our banks are state owned, so it basically means the taxpayer is contributing toward the mortgages of those with tracker rates.

Tenants have to pay USC, and first time buyers and those on fixed/variable rates pay USC AND higher interest rates so that AIB and PTSB (both state owned) don't go bust due to losing money to those with tracker rates. Also some state ownership of BOI, though this is a bit different given they are now profitable.

I don't think this is fair, therefore I think the government should consider a tracker levy on those with unprofitable mortgages. When the ECB increase rates to sane levels this would obviously disappear.

Honohan clarified recently that banks are not actually making losses on trackers. They are in fact just about breaking even. Brendan Burgess on AAM has done the figures and verified this for the 3 major banks.

What the high STV rates are actually subsidising...

Calibos

For my parents, It was the variable rising out of sync with the ECB rate and EBS telling them that this was their last chance to fix in 2011, that convinced them against my advice to fix for 5 years at 5.6% in 2011. They have accumulated arrears in the last 4 years of almost exactly the amount extra in interest at the fixed rate over the variable which while out of sync with the ECB never got to the 5.6 they fixed at nor did EBS remove fixed fix rates for long if at all IIRC. ie. If they hadn't of fixed they'd have no arrears. Unfortunately the austerity budgets started to kick in right around this time and our retail business started its slide and thus ironically they couldn't afford the new fixed rate but would have managed at their old variable and slightly above.

Jim2007

hfallada wrote: »

Because it's a horrific idea. Why should people who made the smart financial choice of getting a tracker be punished? Should have a levy on people who choose mortgages that give them a higher return than average? The answer is no.

Well you could make the same argument for Joe taxpayer - people who took out trackers with banks that were unable to sustain them actually makde a poor choice and why should Joe taxpayer be expected to finance them?

crusier

Jim2007 wrote: »

Well you could make the same argument for Joe taxpayer - people who took out trackers with banks that were unable to sustain them actually makde a poor choice and why should Joe taxpayer be expected to finance them?

One of the best financial decisions I made, you win some you lose some, I pay more than my fair share of taxes and have done so practically all my life, I wonder if the op had one would he be so concerned, there are a lot more things sucking money out of the state than compliant mortgage holders!

hmmm

For once in this country, can we not levy those who made the prudent and informed choice. We've already had a levy on those people who stupidly bothered saving for their pensions.

fliball123

valor rorghulis wrote: »

I'm not an expert and just thinking out loud here, whilst I know this is controversial I'd like to see what others think.

We have a situation where thousands of people are benefiting hugely from having cheap tracker rates on their mortgages, due to the ECB .05 interest rate.

This means the banks are losing money on them, and to remain viable have to charge more on variable and fixed rate mortgages.

Normally this would be fine, however many of our banks are state owned, so it basically means the taxpayer is contributing toward the mortgages of those with tracker rates.

Tenants have to pay USC, and first time buyers and those on fixed/variable rates pay USC AND higher interest rates so that AIB and PTSB (both state owned) don't go bust due to losing money to those with tracker rates. Also some state ownership of BOI, though this is a bit different given they are now profitable.

I don't think this is fair, therefore I think the government should consider a tracker levy on those with unprofitable mortgages. When the ECB increase rates to sane levels this would obviously disappear.

No sorry but the money borrowed by the the mortgage holder is being paid back with interest..If the banks borrowed this money to cover this loan its all on them to pay it back..Nothing to do with the mortgage holder

Dannyboy83

hmmm wrote: »

For once in this country, can we not levy those who made the prudent and informed choice. We've already had a levy on those people who stupidly bothered saving for their pensions.

I can't for the life of me recall where right now, tho I've a feeling it was the Irish Times Podcast, but I've heard serious speculation/discussion recently, that those with private pensions will be probably be excluded from the state pension based on some type of means test, by the year 2040.

Eugene Norman

hmmm wrote: »

For once in this country, can we not levy those who made the prudent and informed choice. We've already had a levy on those people who stupidly bothered saving for their pensions.

Oh people didn't really know what they were doing. It was hardly "prudent" for most people on trackers to buy when they did.

gaius c

Eugene Norman wrote: »

Oh people didn't really know what they were doing. It was hardly "prudent" for most people on trackers to buy when they did.

As long as they are making repayments, what is the problem?

We could do without giving people even more excuses not to pay their mortgage.

Farmer Pudsey

Eugene Norman wrote: »

Oh people didn't really know what they were doing. It was hardly "prudent" for most people on trackers to buy when they did.

It was very prudent. We had just come from a time when banks were slow following rates down when the ECB dropped rates. By fixing you were making sure banks always followed rates. If I remember you could not get trackers on loans over 90%. In reality it was a no brainer. All you sacrificed was first year's subsidised introductory rate.

It was a bit like the time banks had endowment Mortgages loads of people took them out. I remember over 20 years ago Irish Permenant trying to push one on because I was doing a self build and refusing me a standard variable at the time. I walked down the street and BOI gave me a standard variable. I had small pension saving schemes from 10 years previous to that and saw how badly they preformed so was not interested in an Endowment.

In reality it is a certain type of individual that makes these decision they tend not to follow the pack. I have a commercial tracker it is at a slightly higher margin rate than mortgage trackers. You can call it prudent, savvy, generally with most luck has little to do with it. You cannot be lucky all the time.

Sand

What I recall is around 2007 and 2008 talking heads going onto the radio and TV advising people to rush down to the banks, hand in their trackers and take out variable mortgages. Probably talking heads bought and paid for by the banks themselves.

Anyone ought to be able to see that it is better to have a cast iron tracker you can plan around than a variable rate where the banks are free to gouge you. That has always been true.

Icepick

No, communism is not the way to go, OP.

hmmm

Eugene Norman wrote: »

Oh people didn't really know what they were doing. It was hardly "prudent" for most people on trackers to buy when they did.

No, but they hedged their bet by at least locking in a rate that wasn't going to be increased by the capriciousness of the Irish banks - which is what has happened.

jhegarty

Farmer Pudsey wrote: »

f I remember you could not get trackers on loans over 90%.

PTSB had them all the way up to 100% mortgages.

OMD

Sand wrote: »

What I recall is around 2007 and 2008 talking heads going onto the radio and TV advising people to rush down to the banks, hand in their trackers and take out variable mortgages. Probably talking heads bought and paid for by the banks themselves.

Anyone ought to be able to see that it is better to have a cast iron tracker you can plan around than a variable rate where the banks are free to gouge you. That has always been true.

I certainly don't remember that. Who were these talking heads and why did they suggest swapping a tracker for a variable rate mortgage?