Mortgage rate

Sleeper12

newirishman wrote:

As I have been trying to explain to you, this is not correct. Banks are not losing money “hand over fist†on their tracker book. Margins are low but not loss making. Fact is what you can read in the banks financial statements. You should have a read.

You continue to ignore the billions in compensation that the banks have to pay out because of the tracker mortgages. In business you can't cherry pick parts of the business when reporting profits or loss. You have to take the whole. The whole of the tracker business is costing the banks hand over fist. They are paying multiple times more in compensation than than they are making on trackers. The compensation is part of the tracker book.

In your posts you are trying to cherry pick so you can show that they are making profits on trackers. Any accountant will tell you that you can't do this. "Cooking the books" is what this is called. If you tried to get investors or to sell the business with your method you can go to jail

Graham

Sleeper12 wrote: »

You continue to ignore the billions in compensation that the banks have to pay out because of the tracker mortgages.

Which of the banks haven't already made provisions in their financial statements for those payouts?

Sleeper12

Sleeper12 wrote: »

......The whole of the tracker business is costing the banks hand over fist. They are paying multiple times more in compensation than than they are making on trackers. The compensation is part of the tracker book.

....

By costing you mean a gross loss ?
Or not as profitable as the SVR or fixed mortgages?

Also can you quantify in actual figures what hand over fist is?

Sleeper12

Graham wrote:

Which of the banks haven't already made provisions in their financial statements for those payouts?

It doesn't matter where they take the money from. It's still losses from trackers. Also taking money from somewhere else the money still needs to be replaced.

Let's be clear here. I'm not sticking up for the banks

Graham

Sleeper12 wrote: »

It doesn't matter where they take the money from. It's still losses from trackers. Also taking money from somewhere else the money still needs to be replaced.

Let's be clear here. I'm not sticking up for the banks

If a bank has already booked the losses, it doesn't need to keep doing it ad infinitum.

Sleeper12

Augeo wrote:

By costing you mean a gross loss ? Or not as profitable as the SVR or fixed mortgages?

By costing I mean the banks are paying out more due to tracker compensation than they are making from the profitable ones. This is called a net loss. Net loss means that they are not making profits on trackers at the moment. This is likely to be the case for years to come

Augeo wrote:

Also can you quantify in actual figures what hand over fist is?

No I can't quantity this & to be honest I doubt the banks can either as they are still "discovering" more trackers that have to be paid compensation. We haven't gotten to final numbers yet.

ted1

Sleeper12 wrote: »

By costing I mean the banks are paying out more due to tracker compensation than they are making from the profitable ones. This is called a net loss. Net loss means that they are not making profits on trackers at the moment. This is likely to be the case for years to come



No I can't quantity this & to be honest I doubt the banks can either as they are still "discovering" more trackers that have to be paid compensation. We haven't gotten to final numbers yet.

So the tracker isn’t costing them money. Mis management and poor ethics is costing them

Sleeper12

Graham wrote:

If a bank has already booked the losses, it doesn't need to keep doing it ad infinitum.

I'm not sure what your point is there.

Where did they get the money? It hardly a gift so it needs to be paid back over the years to come.
They can't book the losses as they don't know what the total is yet or how many people they will pay out to. They can set aside money for future compensation from other departments but the trackers are still costing them money. If the insurance part of Bank of Ireland pays the loss now then most likely bank of Ireland lending will have to pay this back to bank of Ireland insurance. Bank of Ireland lending could be repaying this for years to come. So long as these repayments are greater than current profits from trackers then their trackers are loss making.

Taking money from profits in a different part of the business doesn't mean that trackers are profitable. If they make a million this year in profits from functioning trackers but pay out 50 million in compensation for bad trackers then they are not making profits from trackers this year. Even taking the compensation money from profits in life insurance still doesn't mean that the trackers are making a profit.

The banks told the government a few years ago that they can't reduce interest rates because the trackers are costing them money.

Sleeper12

ted1 wrote:

So the tracker isn’t costing them money. Mis management and poor ethics is costing them

You could by perfectly correct there. You can call it what you want really. The bottom line is that their tracker book is loss making. The idea of trackers might be sound & maybe it's bad management that caused these losses but they are losses & non tracker rates will remain high till these losses are repaid. They have made this clear & despite the government owning huge amounts of the banks there is no sign of the government stopping this practice of high rates.

Graham

Sleeper12 wrote: »

The banks told the government a few years ago that they can't reduce interest rates because the trackers are costing them money.

We've moved on a few years.

Performing tracker mortgages are profitable.

i.e. the banks can borrow money at a lower interest rates than they are charging tracker customers.

Sleeper12

Graham wrote:

Performing tracker mortgages are profitable.

Again with the "preforming". I never once said that preforming trackers aren't profitable. I said overall trackers are making a loss because of the billions compensation that the bad ones cost. I've already said this in this thread but a business can't cherry pick & claim that trackers are profitable & hide away the loss making ones. Trackers will be a net loss for years to come because of the compensation already paid out & will be paid out in years to come.

I find it hard to read my own tone at times. If I am coming across as snippy, I don't mean to be.

Graham

Provisions for the redress scheme have already been made/booked/accounted for/written off.

Historically, trackers may have been loss making for a period (as was pretty much all lending). Now they're not.

Sleeper12

Graham wrote:

Provisions for the redress scheme have already been made/booked/accounted for/written off.

You've said that already. There's a few issues with the statement though.

1. No one knows the total cost so its impossible for it to be booked, & written off.

2. A homeowner can take the amount offered by redress as an initial payment but still have the right to further action /payment.

3. Remember people have taken their own lives over what the banks did. How much will their families get in court? People had to leave the country over this mess. How much do they get?

4. Where did this redress money come from? They didn't sum it up out of mid air. If they borrowed it from a different department of the bank then it would need to be repaid. If boi life loaned it to boi mortgage then it will be on their books for years to come. Borrowing money from one department isn't booking it & writing it off. It's spreading the cost over the next few years or decade.

5. They are still discovering (at least up to a few months ago) new accounts that are effected that they didn't know about.

Looking at the above I don't believe that the banks know how many people are effected or how much each will cost in the end. How many marriages broke up over this? There will be law suits for years to come.

Even if they magically guessed how much they will have to pay out & they have this money put aside it still has to be paid back to wherever they borrowed it from.

At the end of the day we are arguing semantics here. Another poster tried to make out that I said all trackers are loss making. I didn't say that. Right now some trackers are making a profit but when you factor in the loss making trackers the bank is loosing money on trackers.

The banks aren't reducing interest rates because of this. This is their words not mine. This is what they told a Dail committee or the Dail itself, I can't remember witch.
If this isn't the case why wouldn't the biggest shareholders (the government) insist that they reduce the rates?

newirishman

Sleeper12 wrote: »

You've said that already. There's a few issues with the statement though.

1. No one knows the total cost so its impossible for it to be booked, & written off.

2. A homeowner can take the amount offered by redress as an initial payment but still have the right to further action /payment.

3. Remember people have taken their own lives over what the banks did. How much will their families get in court? People had to leave the country over this mess. How much do they get?

4. Where did this redress money come from? They didn't sum it up out of mid air. If they borrowed it from a different department of the bank then it would need to be repaid. If boi life loaned it to boi mortgage then it will be on their books for years to come. Borrowing money from one department isn't booking it & writing it off. It's spreading the cost over the next few years or decade.

5. They are still discovering (at least up to a few months ago) new accounts that are effected that they didn't know about.

Looking at the above I don't believe that the banks know how many people are effected or how much each will cost in the end. How many marriages broke up over this? There will be law suits for years to come.

Even if they magically guessed how much they will have to pay out & they have this money put aside it still has to be paid back to wherever they borrowed it from.

At the end of the day we are arguing semantics here. Another poster tried to make out that I said all trackers are loss making. I didn't say that. Right now some trackers are making a profit but when you factor in the loss making trackers the bank is loosing money on trackers.

The banks aren't reducing interest rates because of this. This is their words not mine. This is what they told a Dail committee or the Dail itself, I can't remember witch.
If this isn't the case why wouldn't the biggest shareholders (the government) insist that they reduce the rates?

You are clearly not reading any of the replies.
Anyways - just on your pt 1: of course is it possible to make a good estimate and therefore reasonably accurate provisions for the redress costs.
The rest of your points make equally no sense.

The tracker book is not loss making for Irish banks.
There are a multitude of reasons for the comparably higher mortgage interest rates in Ireland. The limited earnings on the tracker book are only one of them.

Graham

Sleeper12 wrote: »

The banks aren't reducing interest rates because of this.

You're mixing up all sorts of emotional statements, emotive questions, historical facts, guesses and vague recollections to try and arrive at some sort of conclusion about the profitability of tracker mortgages and the effects on current mortgage rates.

Based on all of the above, you're stating as fact that which is not and using it to predict future interest rates.

I'd suggest inability/unwillingness to repossess property securing non performing mortgages was a much more significant factor in Irish mortgage rates.

Sleeper12

newirishman wrote:

The tracker book is not loss making for Irish banks. There are a multitude of reasons for the comparably higher mortgage interest rates in Ireland. The limited earnings on the tracker book are only one of them.

It's you not reading my posts correctly.

There could be thousands of reasons why Internet rates are so hight in Ireland however the only reason ever given by the banks to the government was trackers. The government accepted this explanation. Don't shoot the messenger.

Current trackers are profitable as I've already stated however when you add the loss making ones as you do in normal accounting then the overall picture is a loss. When your loss is greater than the profits you end up with a loss. You can't change this fact.

Take last year January to December the banks paid out over half a billion in redress. It's actually around 700 million. This half a billion is a loss for trackers. The current trackers in profit didn't make half a billion in profit to balance this. This was a net loss last year on trackers. Another 1300 trackers affected were discovered last August alone. The central bank says they believe that there could still be more. The banks haven't even been fined yet. That comes later this year or even next year. These fines will sit on the loss side of the tracker balance sheet.

Sleeper12

Graham wrote:

I'd suggest inability/unwillingness to repossess property securing non performing mortgages was a much more significant factor in Irish mortgage rates.

Do you suppose that this will change in the next 5 years?

Even just going on your above post the logical thing to do is to lock in a decent fixed rate for as long as possible.

We've come a very long way round to end up with the same advice. Fix as long as possible & it's highly likely variable rates will come down. Much more likely to increase over the next four years. EU have stated increasing rates next year. Brexit or trump might change that but as we can't see into the future we can only go on the facts at hand.

masterboy123

Great. I understand i need to go for max possible Fixed rate at this stage.

Thanks everyone.

Sleeper12 wrote: »

Do you suppose that this will change in the next 5 years?

Even just going on your above post the logical thing to do is to lock in a decent fixed rate for as long as possible.

We've come a very long way round to end up with the same advice. Fix as long as possible & it's highly likely variable rates will come down. Much more likely to increase over the next four years. EU have stated increasing rates next year. Brexit or trump might change that but as we can't see into the future we can only go on the facts at hand.

Sleeper12

masterboy123 wrote:

Great. I understand i need to go for max possible Fixed rate at this stage.

Well that's my opinion but plenty here seems to disagree with my judgement