Lenders cut mortgage products on offer by more than a third in 12 months

LENDERS have slashed the number of mortgage products on offer in the Irish market by more than a third over the past year.

Figures from the Irish Mortgage Corporation show that since the credit crunch started to take hold on August 1 last year, lenders have scaled back on loan-to-values, increased mortgage margins and tightened underwriting acceptance criteria.

This news comes as a raft of lenders pulls the plug on tracker mortgages.

The latest to do so is Bank of Scotland (Ireland) which confirmed yesterday it is withdrawing its range of tracker mortgages for new business on November 4.

Head of homeloans at BOSI Bernard Kingston said: “We are reluctantly withdrawing our tracker products. They were a real hit when we first introduced them seven years ago and still are today. Unfortunately, the turmoil in the financial markets makes them no longer commercially viable.”

Director of the Irish Mortgage Corporation, Frank Conway said mortgage lenders have acted decisively to remove what has become a significant drain on bank finances.

He said the only remaining lender now offering tracker mortgages is the little known Leeds Building Society.

“Although the basis on which lenders fund mortgages, the three-month euribor has moderated in recent weeks to 5%, there continues, thus far to be a significant gap between it and the ECB base rate of 3.75%, against which tracker mortgages are priced.

“In recent years, anywhere from 350,000 to 400,000 tracker mortgages were taken up by Irish homeowners.

“Many of those tracker mortgages were given out at between 0.95—1.1% over ECB constituting a significant cost to mortgage lenders based on today’s cost of funds,” said Mr Conway.

In recent weeks all of the country’s banks including AIB has withdrawn their tracker mortgage products.