Ripped off by EBS fixed rate???

R

Rocksteady

Registered User
Messages
12
Hi,
I hope I'm not covering old ground with this. I was just hoping for a small bit of advice.

I bought my house when I was quite young and fear I didn't make the best financial decisions with regards the mortgage. I bought in 2009 and was on a variable rate on the mortgage until 2011. It was quite low at first, a little under 3%, then rose to about 3.8%. Then in 2011 I was contacted by EBS (our mortgage holder) who informed me A) that the variable rate was going up to 4.4% with further increases likely and B) that EBS were now offering its customers one final chance to get a fixed rate in place as they would not be offering fixed rates going forward. Contact was by phone on Wednesday 16th February 2011 and if I wanted a fixed rate the forms needed to be with EBS by the Thursday.

Well I panicked and signed up to a five year fixed term rate of 5.65% and have been paying that ever since. It is finally up next year.

I don't know a lot about mortgage rates but was it incredibly stupid to agree to this rate? Was it, as I suspect, significantly higher than the average for the time? And can I feel somewhat aggrieved at that manner of the approach? It felt like if I didn't sign up right now I would be screwed. Aside from anything else, EBS are still offering fixed rates and they're a lot lower than 5.65%
 
Rocksteady .

You were young naiive and ready for plucking.
In fairness though , maybe in 2011 rates should have gone up , not down, so maybe it is just rates went lower.

If you let posters know.

1. Loan to value LTV , eg house worth k100 , mortgage K80.
2. Are you in good steady work
3. Are you with same employer. (would work appear safe)

If it is a case you have low LTV , have good equity in the house etc ,you should get as good a rate as is available and you will get good advice from AAM posters to help you decide on future payments.
 
Gerry Canning said:
You were young naiive and ready for plucking.
Click to expand...

This is just nonsense and fuelling Rocksteady's unfounded feeling that he got a bad deal at the time.

Hi Rocksteady

It is always a difficult decision to know whether to fix or not. Look at the discussions today. I strongly recommend against fixing, but there are many on askaboutmoney who think it's a good idea. Maybe they will be posting again in a couple of years asking if they were ripped off.

I suggest you trawl through
 
Gerry Canning said:
1. Loan to value LTV , eg house worth k100 , mortgage K80.
2. Are you in good steady work
3. Are you with same employer. (would work appear safe)

If it is a case you have low LTV , have good equity in the house etc ,you should get as good a rate as is available and you will get good advice from AAM posters to help you decide on future payments.
Click to expand...
1. It was a 385000 mortgage on a 440000 house. Now it's something around 340 on a 440 house.
2. Yes
3. Yes
 
Brendan ,

Disagree that my comments should fuel Rocksteadys feeling that he got a bad deal at the time.
There can be little doubt that the young are naiive and will be plucked, I did add, that in fairness rates may well have been thought to have gone up., my comment is that youth will be plucked and surely when it came to mortgages in the fluffy times they were !
 
Brendan Burgess said:
This is just nonsense and fuelling Rocksteady's unfounded feeling that he got a bad deal at the time.

Hi Rocksteady

It is always a difficult decision to know whether to fix or not. Look at the discussions today. I strongly recommend against fixing, but there are many on askaboutmoney who think it's a good idea. Maybe they will be posting again in a couple of years asking if they were ripped off.

I suggest you trawl through
Click to expand...

This is somewhat sobering as I was starting to feel like I was duped. As I said, I know little about these rates. I had images of posting this and people spitting out their coffee at what a crazy rate I was on. The manner of the approach still leaves a bad taste though. Thanks for the reply.
 
Rocksteady.

From your answers 1,2,3.
You are in a good position to get a good Standard Variable Rate( SVR )or fixed rate.
So if you then feel EBS are screwing you , you can move.
The call on SVR v Fixed as Brendan says is mixed.
Do your sums closer to time and ask AAM posters for their views on your circumstances.
AAM is a great way of checking things.
 
You could also write them a letter stating your feelings regarding the hard sell and your intentions to move as soon as the fixed rate is up. This may not produce anything but it's worth a try. Maybe suggest you would be willing to enter a new agreement now if they were willing to negotiate early.
 
Gerry Canning said:
Disagree that my comments should fuel Rocksteadys feeling that he got a bad deal at the time.
Click to expand...

I don't think he got a bad deal. It looks like a bad deal now because rates went down. But if rates had gone up we would all say how smart he was but it isn't true. What is true is that he picked the rate he felt at the time was best for him, but it wasn't but he can only know that now.

And it's quite possible that the banker who spoke to the OP was right in his advice. It didn't turn out right is not due to bad advice, it's just the vageries of money markets and nobody could have forseen such low rates.
 
Last edited:
Brendan Burgess said:
I strongly recommend against fixing, but there are many on askaboutmoney who think it's a good idea.
Click to expand...

I'm one of those and have often fixed and always lost out ! Not young and naive but wanted the peace of mind a fix gives and have a dreaded fear of the Irish Life rates at 17%. But finally have gained as now on a fix of around 2.5 % so unless rates go negative and they pay us to have mortgages I surely won't lose out this time. But the main point of fixing is peace of mind. There is no point looking around at everybody else and thinking wasn't I a fool. Silly me I didn't get trackers either. It's not true, one takes the rate at the time that is available and that makes sense.
 
Yes he can move but as the fixed rate is not up until 2016 there could be a hefty penalty for breaking it.

I would be fairly sure OP was not singled out due to age or any other criteria for the offering of a fixed rate, these phone calls are made on the basis of computer generated lists that would be more geared to relatively new mortgages, these were the most likely to switch to another provider. The purpose of trying to tie someone in to a fixed had more to do with guaranteeing they couldn't move than the actual rate itself. The customer was unlikely to shop around for switching while in the fixed term due to the penalty clauses. So the conspiracy if any relates to holding customer base and if the rates had increased then OP would be delighted with their decision. No one had a crystal ball.
 
Rocksteady - I also took out a mortgage in 2011 (March), and it was definitely an interesting time in the market. The Trioka had just come in and banks were raising their interest rates (BOI raised them in April just after I drew-down mine). I fixed for 2 years @ 3.4% at the time and had made a call that the 5 year rate was too high personally to fix that length. If memory serves me correct it was around 5% as well. When my 2 years expired I moved onto a SVR of 4.35%, but the dynamic had changed by then and ECB rates had hit an all time low.

Looking back at the ECB rates at the time - 1/1/2011 it was 1%. April 2011 raised to 1.25%, July 2011 raised to 1.5%. It did not drop down to 1.25% again until November 2011. So if you fixed between March time frame and November time frame, ECB rates were increasing at the time. This is worth keeping in mind when you have that conversation.

I agree with Bronte here - I don't think it was a bad deal at the time, it was just not the right deal for me. I don't think you were ripped off. You were just caught by a hop in the ECB rates and general consensus rates would rise (and then did until November 2011).
 
I know quite a few at that time who fixed. It wasn't clear that rates wouldn't go up at the time. Many people want stability with their costs, and fixing was a way to achieve this.
 
It would be interesting to see any stats of how many fixed at that time. How many would fix now if they had to make the choice. Considering the banks see svr as a cash cow to be milked.
 
Thanks for all the replies. I have less than a year of this fixed term left so have made an appointment with EBS to see if I can get them to release me from the contract early on the basis that if they don't we will pull our business next year when the fixed rate ends. Any advice before I go in?
 
Ask what the breakage fee is first, depending on how it's worked out and cost of funds to bank etc sometimes there is none. If there is one then I don't see them letting you out of it early for free as your threat to move next year is simply then brought forward a year so there is nothing in it for them. If they let you out and you discover next week another bank will refinance you at a better rate/lower repayments are you really going to stick with EBS and pay extra just because they were nice and let you break fixed rate for free?
 
Monbretia said:
If they let you out and you discover next week another bank will refinance you at a better rate/lower repayments are you really going to stick with EBS and pay extra just because they were nice and let you break fixed rate for free?
Click to expand...

Well, I was thinking they might let me out of the current fixed term if they could tie me down to another one. They'd lose the higher interest rate for the remaining 11 months but would lock me in for 3-5 years (albeit at a lower rate). Surely, that would be attractive to them?
 
Maybe, depending on the rates however logic isn't in great supply in bank decisions these days, there doesn't seem to be any decision makers left, it's all based on what the computer says and it might say no but worth a try I suppose. Let us know the outcome.
 
Rocksteady said:
Well, I was thinking they might let me out of the current fixed term if they could tie me down to another one. They'd lose the higher interest rate for the remaining 11 months but would lock me in for 3-5 years (albeit at a lower rate). Surely, that would be attractive to them?
Click to expand...

They should be capable of blending the two rates (capitalize the breakfee and incorporate it onto the new fixed rate). However, I'd be surprised if they'd be flexible to do this though (but I assume the use AIB capital markets now, no?). Can't hurt to ask.
 
Re the initial thesis - was he duped?

No. You're a consumer - you're not trading swap rates. You're not in a position to understand the markets (no one does). Fixing for a consumer & a company is only to provide comfort on future cash flows - i.e. you want to lock in a monthly bill now (for as long as the fix is).

In my opinion, guessing future interest rate movements is only for people in the markets who are trading for their own accounts. E.g. did you know that after 18 months of trending downward, the 10 year forward 1mth Euribor has since spiked from 25bps in mid April to 70bps currently (massive move in less than a month).

If anyone recommends you fix, ask them why and for how long (anyone with a valid opinion on this should be able to explain to you the difference between the 3, 5 and 10 year yield curves). If they can't explain it so you can understand it, then ignore them.
 
You must log in or register to reply here.
Back
Top