Will Ulster bank do deals or make a huge loss on Offset Flexible Tracker Mortgages.

I don't understand. Why do you think ulster Bank would make a (huge) loss on these as interest rates rise?

Also, I would doubt there are many customers who would have savings anywhere close to their loan balance,so imagine that this would very much be an edge case.

But is it not being serviced for free by the free money in the savings account? How is it costing the bank anything? The customer is literally funding their own loan.

But, if the customer owes 100K, and is giving the bank 100K in savings for free, there is no debt that Ulster needs to cover.

If a bank lends 100K, it needs to source that 100K from somewhere (and pay relevant interest on it)

If a bank lends 100K, but the customer gives 25K in savings to offset that, then the bank needs to source 75K from somewhere (and pay relevant interest on it)

If a bank lends 100K, but the customer gives 100K in savings to offset that, then the bank doesn't need to source additional funds. The bank doesn't lose anything.

Likewise, in sourcing additional funds, the banks have access to as much (very close to) free money as they want, as customers keep storing their money in zero (or close to zero) interest rate savings/deposit accounts. Banks have too much of this "free" money on their books at the moment (hence why interest rates aren't rising for savings/deposits)

I just don't see why you think Ulster is losing anything from this (other than opportunity cost)

They are not going to get into individual sales. It'll be a job lot. No way in hell will they let an individual have a buy back at a discount. You're trying to make a case for it but, to be honest, it sounds like you have a vested interest and are trying to construct an argument in favour of it.

Couldn't UB simply keep these mortgages on their books?

They could be serviced from UK sites.

My old UB mortgage call centre was in Scotland.

I really don't know where people get this idea that mortgages of any type lose money for the banks.

For a VERY SHORT period of about 3 months back in about 2012 when funding rates for Irish banks were far higher than the ecb, banks lost money on trackers. The ecb then started their bond buying program and they made profit from that day onwards. The media of course had sensationalist headlines, but of course didn't give the same headlines when it changed

The reason the offset book has not been sold is that it is small, it has conditions and the margin is not great if someone has decent deposits - but its is NOT loss making.

Basically the other banks see it as something that requires too much work and hassle for too little return.

Ulster will probably have to offer a sweetener, but they are very unlikely to spend time offering little discounts to individual holders

There is not a loss on the rate for offsets but there is a lot of management that comes with them if you are trying to sell them on to someone. It's not just the mortgage but also the current account and the linking of them, no bank has a similar product so a bank proposing to buy them would need to set up some new IT or whatever is needed to operate them.

If UB needs to keep them and manage themselves then they need a means of still managing a current account with resultant direct debits/debit card etc.

Add to that someone like me who pays zero interest on mortgage because of offset but still wants access to the draw down facility amount should I want it or might want to transfer it to a new property, great prospect for a new bank!

Between 4 and 5 thousand.

I really don't understand what you are trying to say. I think you don't fully understand them.

You also seem to assume everyone with one has deposits the size of their mortgage.

Remember, as your balance decreases, the max amount of deposit also decreases.

The bank is never losing money and I would suspect that the overall offset deposit is less than 10% of the value of mortgage debt.

On a little checking, there maybe be something offered especially if the cost of managing these is high. They don't lose on the rate at the momnet as its just a small extra on their books. But with all these having t&c's of first active rather than UB, and there being very few of them, no bank will touch them - even at a discount - as the work is just too much for little return

Danske offered these too and gave a further discount on the rate and passed the management to Pepper (as low as 0.25 over ecb!). Some did get offered a discount to settle the account immediately