Permanent TSB, Ireland’s biggest mortgage lender, is considering paying hard cash to customers with tracker mortgages in a bid to persuade them to give them up, according to The Sunday Business Post.

The bank would write off €10,000 on a mortgage or pay it in cash for every 1% increase in the rate currently being paid by the mortgagee. It is also considering offering an incentive for early mortgage paybacks – €500 for every €10,000 of a principal a homeowner manages to pay off early.

At present, around 50% of its €38 billion customer base comprises tracker rates and the bank is losing money on these because of the high cost of capital of borrowing on the open market to fund them.

The bank, which must reduce its loan-to-deposit ratio to 120% under the EU-IMF bailout, currently has a ratio of 200% – the worst in Irish banking. However, it has reduced it from 250% since it acquired Irish Nationwide and by increasing rates on homeowners with variable rate mortgages.

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