Banks wriggling their way out of expensive tracker mortgages
Submitted by admin on Mon, 10/20/2008 - 09:32
Banks are trying to wriggle out of existing tracker mortgage deals they made during the property boom by getting customers to renegotiate the now-unprofitable home loans.
One bank executive admitted his bank was losing money on every tracker mortgage it had written since October 2007, when money market spreads soared above key reference rates.
"The banks are maybe hoping people will be naïve about this," said a senior industry source. "But people can't really move right now. It would only work within institutions."
"It's no big surprise if the banks try this," said Siobhan McAleer, chief executive of the Mortgage Shop chain. "Uncertainty might drive some tracker customers to fix. I would worry about the naive," she said, adding that tracker customers are in a very favourable position in the current market conditions.