Tracker mortgage holders urged to hold firm

TRACKER mortgages represent one of the best value deals mortgage holders have ever received from their banks.

This is according to the director of the Irish Mortgage Corporation, Frank Conway, who has urged tracker mortgage holders to assess any potential offers from their bank on possible tracker mortgage buy-down schemes carefully.

This comes as reports found that homeowners on tracker mortgages could receive a financial incentive from their bank to pay them off more quickly.

“This is definitely a case of what is good for the bank may not be good for the mortgage holders” said Mr Conway, who is also a director with MoneyCoach.ie.

Tracker mortgages have proved costly to banks and banks stopped offering them to customers in the last few years.

The rate on a tracker mortgage tracks that of the European Central Bank (ECB).

Rates at the ECB at currently at a record low but are expected to be increased next month.

“I would encourage mortgage holders to assess the long-term value of accepting any offer from their bank which is designed to wean them off their tracker mortgage deal,” said Mr Conway.

Tracker mortgages gained popularity following the arrival of Bank of Scotland into the Irish market in the late-1990s.

Mr Conway said their launch into the Irish market was largely driven by an aggressive pricing policy which was underpinned with attractive tracker mortgage deals.

“Irish lenders, fearful of losing market share to the aggressive new entrant quickly followed its lead and introduced tracker deals of their own. At the height of the property boom, it was possible to get a tracker mortgage for less than 1% over the European Central Bank base rate of lending,” he said.