Fixed Rates and APRS

I'm currently looking into the fixed rates that are available and am getting confused by the calculators on the websites of the various lenders.

For example, PTSB are offering a 5 year fixed for new business with LTV<50% at Gross 3.7%, APR 4.9%. On 160,000 over 20 years their calculator is giving monthly repayments of €944.46.
BOI are offering 5 year fixed all LTV's at STD 5.7%, APR 4.6%. On 160,000 over 20 years their calculator is giving monthly repayments of €1118.77.

I always thought the APR was the figure to look at so I expected the BOI figure to be lower than the PTSB one, but am assuming that I'm wrong since the lower BOI APR is giving significantly higher repayments.

IS there anyone who could please explain what the difference is between STD/Gross/APR, etc.

Thanks

f9710145 said:

IS there anyone who could please explain what the difference is between STD/Gross/APR, etc.

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When comparing fixed rates, use the nominal/standard/gross rate.

APR is misleading - it presumes the variable rate will remain constant from the start to the end of the fixed rate.

PTSB is the clear winner for LTV <50%

[broken link removed]

Thanks Norf - had figured it out ok but didn't get why the aprs were almost the same.

NorfBank said:

When comparing fixed rates, use the nominal/standard/gross rate.

APR is misleading - it presumes the variable rate will remain constant from the start to the end of the fixed rate.

PTSB is the clear winner for LTV <50%

[broken link removed]

Click to expand...

I don't think it is quite that clear-cut in the current environment where it is very difficult to switch lenders on maturity of the fixed period. One used to be able to freely move at the end of a fixed rate in a market where lenders were even offering to pay legal fees meant it was low-cost to switch. Again this is no longer the case. So you may find that you are stuck with your provider at a high variable rate if you go for an eye-catching opening fixed rate.

Also PTSB's offer is only available to those sub 50% LTV, which in this market is getting to be a rare bunch of people with low initial leverage, and close to the end of their loans. e.g. took out mortgage for 25 years in 1998.

The OPs original question was

IS there anyone who could please explain what the difference is between STD/Gross/APR, etc.

Once upon a time lenders could calculate interest rates any way they chose and the interest rates advertised meant little or nothing.

So then the government stepped in and said that lenders must quote the APR for all loans. The government also detailed how this APR should be calculated.

Today lenders must quote the APR, calculated on the approved, basis for all loans. They can still quote any other rate they like and call it whatever they like.

APR is the only basis on which to compare loans as it is the only basis of calculating interest which should be consistently applied.

If PTSB are quoting APR 4.9%. On 160,000 over 20 years indicating monthly repayments of €944.46.

And BOI are quoting APR 4.6%. On 160,000 over 20 years indicating monthly repayments of €1118.77

It would appear one or both of them is wrong.

I drew up my own calculator and got €160,000 over 20 years, paid and calculated monthly in arrears, and got repayment figures of

APR 4.6% €996

APR 4.9% €1,021

both rounded off to the nearest €

The Apr is based on the entire period of the loan. Both are correct because boi's current variable rate is lower than ptsb's and the Apr is based on 20 years - 5 years at the fixed rate and 15 years at the individual institutions standard variable rate.

If the Apr was based on just the fixed term they would be almost identical to the actual fixed rate.

McCaul - that's the explanation I was looking for, thanks.
We've a PTSB tracker at the moment but really need to move to a bigger home as we've outgrown the one we're in. At the moment BOI may have a lower variable rate than PTSB but unfortunately there is no way of telling how they will compare in 5 years time. Also I'm currently at home with the kids for the past year and will remain so for another couple of years (by choice) but suspect that in 5 years time things will be different and we'll probably be back to 2 salaries and be in a better financial position. We may be screwed with a 10% variable at that point but we're on the tracker by pure fluke as PTSB rang us and offered to move us from our variable to a better rate a couple of years ago and we agreed, without even registering it was a tracker (young and naive, didn't read the fine print). So we feel we've had our few good years out of pure good luck. We need to upgrade the house so for the moment are just looking for the best rate for the next 5 years.
Incidentally, we're only looking for a 50% mortgage and we took our original one out in 2001 over 30 years, for a 3 bed semi in a nice part of Dublin, don't think it's that rare a bunch of people.