Lenders could soon ‘buyout’ tracker mortgages with write-offs

Lenders could soon be allowed to buyout tracker mortgages by offering borrowers debt write-offscurrent-tracker-mortgage-rates

A proposed change to Central Bank rules of conduct could allow banks to take tracker mortgages off homeowners in exchange for a debt write-off. As it currently stands, the Code of Conduct on Mortgage Arrears – the Central Bank’s set of rules by which lenders must abide – prohibits banks from touching the trackers of struggling homeowners.

However, if the Central Bank go ahead to change this, banks will then be allowed to offer write-offs to people who give up their low-interest tracker loans. This amendment is to be formally announced in a fortnight’s time with the regulator seeking opinions on the change from the wider public. Around 375,000 mortgage holders with tracker rates have benefited from several cuts to the European Central Bank rate.

While this is good news for these customers, trackers have become loss-making for banks. This rule change would facilitate both the banks and distressed mortgage holders. It would allow those in trouble to engage with the bank to broker a deal on their loan while allowing the banks to minimise losses on its tracker mortgages.