Q&A Dominic Coyle
Will IBRC sale of my mortgage see interest rate rise?
I got a letter from IBRC on the planned sale of the mortgages under its control to qualified bidders, including banks, individuals, funds etc. The letter invites submissions from mortgage holders on how the loans are to be sold.
As a mortgage holder, I am worried about how my mortgage may be managed, and how the winning bidder may extract greater profit margins by increasing interest rates.
Is there anything I, or others, can do with submission rights that might have a meaningful outcome on who my mortgage is sold to?
Mr AO’R, Cork
It’s always worth having your say, though I do share your concern on exactly how much impact that might have on the outcome for your mortgage.
If no buyer can be found, they will be transferred to the State “bad bank”, the National Assets Management Agency (Nama).
As part of the process of arranging the sale of the loans, the State-appointed special liquidators for IBRC have sought the views of the holders of the loans – people like yourself.
If you are unhappy with your loan being sold on to an unknown third party, then you should say so.
Will it make a difference? That’s uncertain, especially in the case of residential mortgage loans – which, by their nature, are smaller individually than some of the other loans held by IBRC, such as those of developer Paddy McKillen over which he has instituted legal action.
The IBRC is grouping the loans it holds in four “portfolios”. These include commercial borrowings here in Ireland and abroad, and also residential mortgages.
This last group – amounting to a loan book of about €1.8 billion and involving the home loans of 13,250 customers of the former Irish Nationwide – is in a portfolio called Project Sand.
That means the average loan is just under €136,000. It’s hard to make an impression when you are just one voice in 13,250 – but there again you might find many other mortgage customers feel the same as you and that your aggregate views do make a difference.
Understandably, your main concern is on how any new owner may manage your mortgage. And, on this, there is unlikely to be much clarity until it is known who that new owner will be.
The special liquidators say that there has been a lot of interest in the loan port- folios, which would mean there is little chance of the borrowings staying in the hands of the State – through Nama.
Of course, they could just be talking up their chances of success ahead of what will be critical auctions. And, crucially, they have yet to state who will qualify as a bidder and how that is determined.