Tracker mortgages costing banks €708m every year, research reveals

Tracker mortgages are costing the three domestic banks roughly €708m every year, which is a huge drain on profitability, according to research conducted by Merrion Stockbrokers.

These type of mortgages track the main ECB interest rate, which is at historically low levels. The cost of funding exceeds the returns on these mortgages.

AIB has a tracker mortgage book valued at €16.59bn. Merrion analyst Ciaran Callaghan estimates it costs the State-owned bank €290m to carry these mortgages every year. It costs Bank of Ireland €128m for its €17bn tracker mortgage book and €291m for Permanent TSB’s €14.9bn book.