Bank of Ireland tracker mortgage % increase

Thrugelmir

hightable wrote: »

yobgnivas wrote: »

adding my two penneth to this thread (also to keep updated on developments....)

Also, has anyone looked into whether the BoI are entertaining mortgage redemption offers

May depend on the product you are currently on.

BOI have been incentivising borrowers to leave.

Those with the low base rate trackers wouldn't be targeted. As any deal will leave them in a financially worse position.

hightable

Thrugelmir wrote: »

hightable wrote: »

May depend on the product you are currently on.

BOI have been incentivising borrowers to leave.

Those with the low base rate trackers wouldn't be targeted. As any deal will leave them in a financially worse position.

You keep on saying this please explain the numbers. There must be a number that they can sell at which does not leave them financially worse off. I know they can never be worse off unless they sold numbers which were to their disadvantage. Why would they do that?

Thrugelmir

hightable wrote: »

Thrugelmir wrote: »

You keep on saying this please explain the numbers. There must be a number that they can sell at which does not leave them financially worse off. I know they can never be worse off unless they sold numbers which were to their disadvantage. Why would they do that?

If the cost of funding to BOI is 2.85% for example .Then anything lent at a rate lower than this is losing them money.

hightable

Thrugelmir wrote: »

hightable wrote: »

If the cost of funding to BOI is 2.85% for example .Then anything lent at a rate lower than this is losing them money.

They borrowed the money I bought at BOE I paid BOE + X. This is on their books I pay it back they make X over term. You have not explained how they can lose money from me. Except if they borrowed money above what I paid but that is not possible. Only conclusion they are not being paid back. So I have to pay more to pay for their poor decisions.

Please explain where this is wrong.

magpiecottage

There seem to be similarities between this issue and the Santander Business Banking fiasco last summer.

In that case, Santander attempted to use the terms & conditions of the account to renege on a "free business banking forever" promise. A climbdown WAS forced on it. This included widespread individual complaints with FOS referrals and reference to the case of Carhill v Carbolic Smoke Ball Company.

rckl88

hightable wrote: »

Thrugelmir wrote: »

They borrowed the money I bought at BOE I paid BOE + X. This is on their books I pay it back they make X over term. You have not explained how they can lose money from me. Except if they borrowed money above what I paid but that is not possible. Only conclusion they are not being paid back. So I have to pay more to pay for their poor decisions.

Please explain where this is wrong.

Not confident but believe they can earn BR if they deposit at BoE but they borrow money elsewhere such as other banks at LIBOR which is higher rate than BR. Not sure if BoE lend money to retail banks like you are implying. Economics is not simple and there are many factors involved. Try googling for facts and more info.
Ps you are right about point where there are some defaulters, where they end up with a repossessed house that may be worthless so they have to write off that mortgage. So they have to cover the losses from elsewhere...

Thrugelmir

rckl88 wrote: »

Not sure if BoE lend money to retail banks like you are implying.

BOE is lender of last resort. So banks raise funding on the open markets.

kingstreet

Funding rates change.

A lender may have arranged a tranche of funding for five years, back in 2004. That needs to be renegotiated every renewal and the rate will then reflect market conditions and the lender's strength, or lack thereof, at that time.

BoI cannot raise funds at the same rates as it used to, so it has to find a way to bridge the gap between what it is paying out and what it is getting in. Last year, it hiked the SVR for residential borrowers to 4.49% and this year it has found a way to increase the rates for some of its tracker borrowers.

Both those types of borrower are going to be keeping BoI afloat, or at least boosting its balance sheet in some way or another and paying for the deals of those borrowers BoI can't get off their cheap rates.

hightable

kingstreet wrote: »

Funding rates change.

A lender may have arranged a tranche of funding for five years, back in 2004. That needs to be renegotiated every renewal and the rate will then reflect market conditions and the lender's strength, or lack thereof, at that time.

BoI cannot raise funds at the same rates as it used to, so it has to find a way to bridge the gap between what it is paying out and what it is getting in. Last year, it hiked the SVR for residential borrowers to 4.49% and this year it has found a way to increase the rates for some of its tracker borrowers.

Both those types of borrower are going to be keeping BoI afloat, or at least boosting its balance sheet in some way or another and paying for the deals of those borrowers BoI can't get off their cheap rates.

Well the numbers are still opaque they lend for 25 yrs but borrow for tranches of 5. Economics is numbers and if they cannot work out the numbers then why should I pay for their imprecision. They also have current account deposits which I pay for them to keep. It does seem that capitalism is failing, I know that some say we are not in a capitalist system. Let them fail and see what they can sell the debt for. I will give them 10 in the 100.

Thrugelmir

hightable wrote: »

but borrow for tranches of 5.

Where do you get 5 years from?

They also have current account deposits which I pay for them to keep.

You pay nothing. The costs are borne by others.

It does seem that capitalism is failing,

Has imperfections. Better than other systems.