AIB is in exclusive discussions with Ulster Bank parent NatWest to buy a €6bn portfolio of Ulster Bank tracker mortgages as part of the UK bank’s departure plan.
Q: Will I keep my tracker?
A: Yes. There will be no attempt to take your tracker from you. Trackers are the best value mortgages in the market, bar none.
They are set at a percentage margin over the European Central Bank (ECB). These margins are between 1pc and 1.25pc, but some are as low as 0.5pc.
The ECB rate is zero at the moment meaning even if rate rise by 0.75 percentage points, and your tracker margin is 1pc over the ECB rate, you will still only be paying an interest rate of 1.75pc.
No other mortgage on offer in the Irish market beats that.
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Q: How many mortgage holders are affected by this?
A: We don’t know for certain but it is thought that Ulster Bank has around 40,000 tracker-rate customers.
Q: Should I move my mortgage?
A: Do nothing. If the deal goes through remember AIB can’t change the tracker terms and conditions. My performing tracker was sold to vultures and there has been no change in terms. Do not switch your mortgage, or you will lose the tracker.
Q: Is it good that AIB is taking over the ownership and administration of these homeloans?
A: At least AIB is active in the mortgage market. This means that if you want to trade up or borrow additional funds for the likes of a reto-fit there are options there, according to consumer advocate Brendan Burgess.
You could even keep the tracker rate, but pay a slightly higher margin, if you need to move.
Those people whose mortgages have been sold to an investment fund have found themselves bank locked, according to tracker mortgage expert Padraic Kissane. They have to give up their tracker if they want to trade up.
Q: But does AIB not have a really bad record when it comes to tracker trickery?
A: It certainly has an awful record for the way it has treated tracker customers down the years. It tried to trick many of them off the good-value tracker rates.
So far it has been forced to compensate 12,180 customers for denying them a tracker rate which they were entitled to, and it is likely that AIB and its subsidiary EBS will be fined at least €70m by the Central Bank over the treatment of tracker customers.
Q: Should I now also move my current account to AIB?
A: Ulster Bank customers need to find new current account providers, but there is no need to do that. Some experts think you would be wise to have separate current account and mortgage providers.
It might take a year for the Ulster Bank transfer of trackers to AIB to be completed. So if you are seeking a new credit card provider or want an overdraft with your current account from the same bank where your mortgage is you could be waiting a while.
Q: Also, why has KBC extended the deadline for closing current accounts?
A: Quite simply because it was bounced into it. Last week the ‘Irish Independent’ carried comments from the chairman of Consumers Association Michael Kilcoyne calling on the Central Bank to “get its finger” out in relation to the closure of KBC and Ulster Bank and the potential for it to become chaotic.
Days later the Central Bank wrote to the departing banks and the three that are remaining telling them to up their game, and threatening to block the exit of UB and KBC unless current account customers get sorted out.
This prompted a U-turn from KBC. It had said it would give its customers just three months to switch to a new provider and close their accounts from the time it starts writing to them in June.
It is now giving customers six months to get sorted out with new accounts.