The exciting new scheme announced yesterday will be a welcomed move for families who are to be given the chance to move house while holding onto their valuable tracker. The scheme is expected to help create movement in the family home market which has been very slow paced partially due to a massive lack of available property.
The landmark decision made by Permanent TSB is set to go much further than current schemes currently offered by Bank Of Ireland and Ulster Bank which offer limited tracker mortgages.
One key element of the new scheme being offered is that homeowners will be able to keep the tracker rate they currently possess provided they pay an extra 1pc for the full term of the tracker mortgage that is far longer than any other banks will allow.
Under Permanent TSB plan, a couple who owe €250,000 on their tracker mortgage who currently pay €1,000 monthly charge will be able to take their loan with them should they decide to move house.
The couple will pay a slightly increased monthly charge of €1,100 a month, but they will hold onto their tracker mortgage.
The move is expected to shift the property market heavily as around 375,000 residential mortgages are tracker mortgages and a substantial amount of these households had previously decided not to move for fear that they will lose their cheaper mortgage loans.
This due to a combination of people holding onto their cheap tracker mortgages as well as the problem of negative equity mortgage, where the amount owed on the mortgage is worth more than the property.
This has resulted in to a shortage of family type properties on the market, particularly in the capital which is a huge impediment to the recovery of the housing market.
Other lenders on the market such as AIB and BOI are said to be under massive pressure to offer similar deals and AIB are believed to be considering similar options. It is hoped that if other lenders follow suit it will free up more houses on the property market, increasing the number of available properties on the market.
This new scheme is much more appealing than taking out a new mortgage on variable terms involving a much higher loan repayment.