Finding home for tracker mortgages key to bailout exit

The Government’s chances of successfully emerging from the EU/IMF bailout programme at the end of this year and the prospects of the covered banks returning to profitability hinge on finding a solution to the loss-making tracker mortgage problem.

Tracker mortgages are priced off the main interest rate set by the ECB. In the boom time, when Irish banks could tap extremely cheap money from the wholesale money markets, they could offer tracker mortgages because they were still making a reasonable rate of return.

Bank of Ireland has a gross loan book of €105bn. Its total Irish mortgage book is €28bn and of this €17.2bn are tracker mortgages — €11.7bn residential/home owner and €5.5bn in the buy-to-let sector.