Explanation of variable rate?

B

bobo

Registered User
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Am I correct to assume the following: If i choose a variable rate then the mortgage provider varies the rate in line with the ECB rate as they so desire. i.e. rates can decrease but it is up to the discretion of the mortgage provider to pass on the decrease? (I presume they typically will all pass on a rate decrease in order to remain competitive).
If this is so then would it not be better to go for a tracker rate where the variable element is set soley by the ECB rate??

On an aside topic - are tracker rate mortgages recommended or something to steer clear of for first time buyers?

thanks,
B
 
bobo said:
Am I correct to assume the following: If i choose a variable rate then the mortgage provider varies the rate in line with the ECB rate as they so desire. i.e. rates can decrease but it is up to the discretion of the mortgage provider to pass on the decrease? (I presume they typically will all pass on a rate decrease in order to remain competitive).
If this is so then would it not be better to go for a tracker rate where the variable element is set soley by the ECB rate??

On an aside topic - are tracker rate mortgages recommended or something to steer clear of for first time buyers?

thanks,
B
Click to expand...

You are right. Generally tracker mortgages are harder to get...they'll have certain conditions, Loan to value, size of mortgage etc. They are more readily available nowadays though.
The benefit is you pay a fixed margin which is usually lower than that of a variable rate mortgage.
 
While most or all trackers do have certain qualifying terms & conditions is it really fair/accurate to say that they are generally more difficult to obtain than standard variable mortgages?
 
ClubMan said:
While most or all trackers do have certain qualifying terms & conditions is it really fair/accurate to say that they are generally more difficult to obtain than standard variable mortgages?
Click to expand...

Originally they were for customers the bank deemed to be "lower risk" but you're right nowadays they're pretty standard as the market has become more competitive.
If you're on a variable and ask to switch to a tracker they do still generally say "we have to see if we can do that"...and then do it!
 
All lenders are offering tracker rates alongside their standard variable rates so they are no more difficult to obtain and in more cases represent better value for money. Very, very few people are taking variable rate mortgages these days.

Sarah

www.rea.ie
 
Sarah W said:
All lenders are offering tracker rates alongside their standard variable rates so they are no more difficult to obtain and in more cases represent better value for money. Very, very few people are taking variable rate mortgages these days.

Sarah

www.rea.ie
Click to expand...

It's fair to say they used to be harder to get though?
 
Yes; at first only a number of lenders offered them and only on specific loan amounts and/or LTVs. However they quickly became widely available from all lenders and all amounts, etc.

Sarah

www.rea.ie
 
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