AIB (who encompass EBS and Haven) have announced that their existing tracker customers can ‘keep their tracker’ if they move. The update from the broker arm of the bank Haven said this was confirmed only for existing Haven customers and that AIB would release their update towards the end of July but the news in the papers says otherwise.
What does this mean?
Firstly it is limited to the customers of the state owned bank, it is also more generous than competitors have offered which gives AIB the unusual accolade of being the bank who (at least it is perceived) write off debt faster, concede to government calls for lower rates and ensure they keep a legacy tracker book for longer than expected.
Why do they do it?
Existing customers have to dispose of one property and buy another, so it’s a way of getting ‘new lending’ buy doing so by giving it to tried and tested customers, a proven track record is a better indication of loan repayment capacity than almost any other metric.
They also increase their margin, trackers are not money makers, but part of this is that they will charge an additional 1% on the loan, over the course of 25 years on a €200,000 loan this works out at about about €28,000 in interest which doubles the interest obtained at present rates (where trackers are c. 1.15%).
The hope perception is that the bank that swallowed up over €20,000,000,000 (2nd most toxic after Anglo) is somehow ‘doing its bit to save the economy’.
They will be issuing a guide on this product in coming days to brokerage, for now all we know is what they leaked to the papers in advance of industry as is their trend recently.
Technically, the new loan of old tracker +1% is a ‘new loan’ when it is issued, so glad to see trackers return to the market!