Mr. Padraic Kissane:

I was expecting a question on EBS. One of the issues with EBS, and what was unusual, was if someone wanted a tracker mortgage he or she had to sign a tracker application form which stated the person could move to a fixed rate or a variable rate once without penalty throughout the life of the loan. I have consistently challenged this bank as to where is the without penalty aspect of this. I have received a reply from EBS that there would be a penalty if there was a breakage fee in going from a tracker to a fixed or variable rate, which could never apply because there are no fees for breaking with a variable rate because it is a variable rate. Its loan offer, which in many cases was issued after that application form - and we are getting technical here - mentions the variable ECB rate plus 1.25%. With the tracker mortgage, the margin is linked to the specified index or indices and remains constant for the life of the loan.

One part not accepted by the banks - I am not going to say it is not understood by the banks - is that the first thing everybody forgot about with regard to a tracker mortgage was it was a product first and not an interest rate. The legalistic view is the underlying contractual basis of the loan was established when it became a tracker. It did not get altered when someone went into a fixed rate for a short period of the loan, it remained running. The only part that would change was the ECB rate, and nobody could predict what that would be at the end or at the outset, but the margin was constant. Everyone signed up to the very same tracker product. All that has happened since July 2008 is the banks have attempted to state retrospectively that this what they meant, or that they had a non-price promise tracker product, as Permanent TSB has said. All of this is made up. With certainty, in every system a loan must be underwritten before it is ever issued, and the margin is there because the underwriter must know if it stresses it to plus 2% what that will cost the customer. This is in everyone's system. What the banks did, and one can imagine the work that went into it because of the cost issue of more than €600 million, was looked to see whether there was any way to get people off tracker rates. I am absolutely certain this happened in all 15 banks.

As a complete aside, people who had credit issues and had to go to Springboard Mortgages, which is owned by Permanent TSB, to get a mortgage are on better margins today than someone with a 50% loan to value offer with Permanent TSB, and Permanent TSB thinks this is right. The important thing is no margin was stated in the Springboard Mortgage loan offer or in the Permanent TSB offer, but the Springboard Mortgage person is back on the margin used in the system and the Permanent TSB person is not. I had an exercise which I showed the Central Bank. I could put out four identical loan offers, one at 0.8% above the ECB rate, one at 1% above the ECB rate, one at 3.25% above the ECB rate and one at 2.25% above the ECB rate, and the job is to match the margins to the loan offers. Nobody could do it, because all of the loan offers are the same, but people think they are right. This is why I state today I am 100% certain I am right on the margin issue. I am challenging and continuing to challenge the Central Bank on this and I do not know why it is taking it so long, because these are the questions it should be asking Permanent TSB. My question on the non-price promise tracker is whether any of the customers were told this is what it was, because otherwise, why are they all challenging this issue.