Banks won’t offer 25% off your mortgage for your tracker

The story today from the Examiner by Stephen Rogers is worth a read, but at one point the IBA chief Ciaran Phelan states¬† “Banks may still attempt to offer terms to customers to woo them off trackers, but we believe that tracker customers would need a break-deal offer in excess of 25% to make it worth their while.”

I don’t know where that calculation comes from – because it ignores the time value of money on a future debt and also doesn’t take into account current debt pricing issues. For instance, rates on all sorts of financial products are rising, if you have non mortgage debt this is a concern. It is the ‘weight’ of debt rather than the ‘rate’ which is the problem for the majority of people.

By that I mean: a person who is struggling with several debts may be well served by letting go of their current tracker, but that doesn’t mean they have to abandon it, a bank could just as easy turn around and say ‘we’ll give you …

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