Key Post Should borrowers with trackers consider fixing? (General guidelines)

[Dadof2]

Your tracker "margin" is 1%.

That will always be the case (unless you give it up)

Your mortgage rate is your tracker margin plus the ecb reference rate. (Currently 0.5% giving a 1.5% effective mortgage rate)

If you fix for 4 years you will get good value for 4 years followed by bad value for the following 22 years as you will have lost the tracker and be with boi who are very expensive.

My own view is that unless you are able to fix for 20 years+ at 3%, it's crazy to look at fixing in your situation.

Ecb medium term target is 1.5-2%. So over the next 26 years your average rate should be 3%

Thanks for the response peemac

My tracker is ECB rate +1.5% so with the recent 0.5% rate increase I’m now paying 2.0%. Is my margin not 1.5%?? Does this sway your opinion or should I still only consider fixing if it’s long term like you said…20yrs+

As I understand it, every 0.25% increase pushes my repayments up by c.€51 per mth…if a total of 2% increase is coming our way that’s an extra €408 per mth to pay out… it could be more

 

[Brendan Burgess]

My tracker is ECB rate +1.5%

This is not a cheap tracker. It has some value, but not much value.

1) You should not switch to BoI. They have predatory lending rates for existing customers. Look at this thread for example:

BOI existing customer, can’t avail of new customer rates

Our current mortgage is with BOI, part on tracker and part on fixed rate and we are looking to fix the lot at a reasonable rate. We applied with Avant first but the rates were increased and the best available rate is now with BOI but only for new customers. It seems absolutely bizarre to me that...

www.askaboutmoney.com

2) With 320/420 , you have a 76% Loan to Value.
You could fix with AIB at 2.2% for 4 years high value mortgage.
Or you could fix with Avant at 2.85% for 5 years
With ECB rates expected to rise to 1.25% this month, that would put you on 2.75%
So fixing seems about right.

3) Apply now to AIB and Avant. If rates go up before you draw down the mortgage you should probably stay where you are.

4) Please also just double check with Pepper if there is a fixed rate option. I presume that this has not changed.

 

[Brendan Burgess]

@HansGruber

Sorry, I missed this the first time you posted.

want to remain with AIB

Absolutely correct. Stay with AIB.

After that, it's very hard to know what to do here.

Possibly trade up in short/medium term, 3-5 yrs-ish,

• €110k ECB +0.9% (20 yrs remaining)
• €70k 5 yr fixed 2.45% (14 yrs remaining)

A tracker of ECB +.9% usually has some long-term value. But if you are trading up, it has little value.
Later this month the ECB rate will be 1.25%, so the rate on your mortgage will be 2.15%

5 yrs @ 2.45% (or 7 yrs @ 3.05%)

So if you stay on the tracker and rates increase by more than .3%, then you will lose out.

So I think I agree with the 2.45% for 5 years.

If you trade up in three years, you may face a break fee, but I don't think it will be too much.

But it's very hard to know.

You have a mortgage of €180k on €350k. If you bring your mortgage down to €175k, then you would qualify for the <50% LTV rate. It would be 2.35% for 5 years. So, if you have €5k sitting around doing nothing, then you should pay this off your tracker before fixing.

Brendan

 

[Dadof2]

This is not a cheap tracker. It has some value, but not much value.

1) You should not switch to BoI. They have predatory lending rates for existing customers. Look at this thread for example:

BOI existing customer, can’t avail of new customer rates

Our current mortgage is with BOI, part on tracker and part on fixed rate and we are looking to fix the lot at a reasonable rate. We applied with Avant first but the rates were increased and the best available rate is now with BOI but only for new customers. It seems absolutely bizarre to me that...

www.askaboutmoney.com

2) With 320/420 , you have a 76% Loan to Value.
You could fix with AIB at 2.2% for 4 years high value mortgage.
Or you could fix with Avant at 2.85% for 5 years
With ECB rates expected to rise to 1.25% this month, that would put you on 2.75%
So fixing seems about right.

3) Apply now to AIB and Avant. If rates go up before you draw down the mortgage you should probably stay where you are.

4) Please also just double check with Pepper if there is a fixed rate option. I presume that this has not changed.

Thanks Brendan

In the grand scheme of things my tracker is not the worst but by far not the best. I benefitted from it for the last decade or so but I feel I need to act now to keep the mortgage repayments more affordable.

It will impact my overall savings plan that I have but trying to minimise the impact as best as I can

I’ve applied to several banks so hopefully I get quick replies before further rate increases

Contacted Pepper who confirmed they are an administrative company with no lending licence so not able to offer any rates (fixed/variable or otherwise)

Thanks again, appreciate your feedback

 

[HansGruber]

@HansGruber

Sorry, I missed this the first time you posted.



Absolutely correct. Stay with AIB.

After that, it's very hard to know what to do here.





A tracker of ECB +.9% usually has some long-term value. But if you are trading up, it has little value.
Later this month the ECB rate will be 1.25%, so the rate on your mortgage will be 2.15%



So if you stay on the tracker and rates increase by more than .3%, then you will lose out.

So I think I agree with the 2.45% for 5 years.

If you trade up in three years, you may face a break fee, but I don't think it will be too much.

But it's very hard to know.

You have a mortgage of €180k on €350k. If you bring your mortgage down to €175k, then you would qualify for the <50% LTV rate. It would be 2.35% for 5 years. So, if you have €5k sitting around doing nothing, then you should pay this off your tracker before fixing.

Brendan

Thanks for the response Brendan - much appreciated. I think I’ll fix for 5 years @ 2.35%. If ECB rate goes above 1.45% it makes sense in the near term. As you say if trading up ultimately then there’s little long term value in the tracker anyway.

 

[peemac]

Thanks for the response peemac

My tracker is ECB rate +1.5% so with the recent 0.5% rate increase I’m now paying 2.0%. Is my margin not 1.5%?? Does this sway your opinion or should I still only consider fixing if it’s long term like you said…20yrs+

As I understand it, every 0.25% increase pushes my repayments up by c.€51 per mth…if a total of 2% increase is coming our way that’s an extra €408 per mth to pay out… it could be more

Sorry, I read it that current rate is 1.5% and will go to 2% in a few weeks.
The July ecb rate is already marked on trackers, so I assumed that if you are currently at 1.5% that your tracker is 1%.

If your tracker is 1.5% margin, then your mortgage rate is now at 2% (July ecb increase) and almost certainly going to 2.5% on 1st Oct (possibly 2.75%) with the interest rate announcement next week.

 

[Dadof2]

Sorry, I read it that current rate is 1.5% and will go to 2% in a few weeks.
The July ecb rate is already marked on trackers, so I assumed that if you are currently at 1.5% that your tracker is 1%.

If your tracker is 1.5% margin, then your mortgage rate is now at 2% (July ecb increase) and almost certainly going to 2.5% on 1st Oct (possibly 2.75%) with the interest rate announcement next week.

My letter from Pepper (received early this week) advised that the 0.5% rate increase will be applied to September’s monthly payment, so it’ll be 2% with more rate hikes coming

Giving up the tracker seems crazy even if it is 1.5% especially as there’s 26yrs left but paying up to an extra €400pm (assuming rates increase by 2%) for the next while on top of increased energy bills/fuel costs/groceries and other inflation impacts… it’s depressing
Fixing for a longer term like 10yrs-15yrs makes sense if the rate is right but jumping from 1.5% to 3% or possibly more is something I’m reluctant to do

A lower rate of 2.2% for a fixed period of 4yrs is more palatable but what happens in 4yrs time? What will the rates be like then? No point giving up the tracker just for a 4yr fixed rate if in 4 yrs time the rates are around 5% and I’m looking to fix again. Worse again would be if the ECB rate is back down to 0% and I’ve given up the tracker!!

Driving myself demented but I can’t control the ECB or inflation or whatever other scenario is lurking around the corner

Take a 4yr fixed rate now, make a lump sum payment in 4yrs time to get a better LTV rate and take it from there?

I need to switch off now… sorry for the waffle

 

[peemac]

My letter from Pepper (received early this week) advised that the 0.5% rate increase will be applied to September’s monthly payment, so it’ll be 2% with more rate hikes coming

Giving up the tracker seems crazy even if it is 1.5% especially as there’s 26yrs left but paying up to an extra €400pm (assuming rates increase by 2%) for the next while on top of increased energy bills/fuel costs/groceries and other inflation impacts… it’s depressing
Fixing for a longer term like 10yrs-15yrs makes sense if the rate is right but jumping from 1.5% to 3% or possibly more is something I’m reluctant to do

A lower rate of 2.2% for a fixed period of 4yrs is more palatable but what happens in 4yrs time? What will the rates be like then? No point giving up the tracker just for a 4yr fixed rate if in 4 yrs time the rates are around 5% and I’m looking to fix again. Worse again would be if the ECB rate is back down to 0% and I’ve given up the tracker!!

Driving myself demented but I can’t control the ECB or inflation or whatever other scenario is lurking around the corner

Take a 4yr fixed rate now, make a lump sum payment in 4yrs time to get a better LTV rate and take it from there?

I need to switch off now… sorry for the waffle

Don't beat yourself up as 1.5% is not too bad. Rates will rise in the short term. But the ecb has stated that their medium term target is 1.5%.

You are 100% correct not to fix short term as you would regret it for the other 22 years.

 

[Brendan Burgess]

If you have a tracker with one of the below lenders, read the information in the first few posts of the current thread but please post any questions in the appropriate thread:

Key Post - I have a Permanent TSB tracker – should I consider fixing?

Summary It is almost never correct to fix with ptsb If you have a large mortgage with a high margin, e.g., ECB + 1.5% or higher, you should switch to another lender and fix. @Paul F has set out the best rates here. As of September 2022, it is preferable to switch to AIB or Avant. Some general...

www.askaboutmoney.com

Key Post - I have a Bank of Ireland tracker – should I consider fixing?

Moderator's note: If you want to ask whether you should fix or not (or switch to another lender), please provide the following information: 1) Existing tracker margin. (This is set in your mortgage contract.) If your tracker margin is 1%, please state it in the following format to avoid...

www.askaboutmoney.com

Key Post - I have an AIB tracker – should I consider fixing?

Some general comments which apply to most AIB cases. Apart from the shocking treatment of tracker customers, AIB has treated its mortgage customers fairly – well, fairly in comparison to other lenders. It does not maintain an artificially high default variable rate, and so lazy or busy...

www.askaboutmoney.com

Key Post - I have an Ulster Bank tracker – should I consider fixing?

What will happen if I stay on my tracker? While permanent tsb is acquiring the non-tracker mortgages from Ulster Bank, AIB is acquiring the tracker mortgage book. So your mortgage will move to AIB. Apart from the shocking treatment of tracker customers, AIB has treated its mortgage customers...

www.askaboutmoney.com

Key Post - I have a KBC tracker – should I consider fixing?

Moderator's note: If you want to ask whether you should fix or not (or switch to another lender), please provide the following information: 1) Existing tracker margin. (This is set in your mortgage contract.) If your tracker margin is 1%, please state it in the following format to avoid...

www.askaboutmoney.com

Key Post - I have an EBS tracker – should I consider fixing?

Moderator's note: If you want to ask whether you should fix or not (or switch to another lender), please provide the following information: 1) Existing tracker margin. (This is set in your mortgage contract.) If your tracker margin is 1%, please state it in the following format to avoid...

www.askaboutmoney.com

Key Post - I have a tracker managed by Pepper – should I keep it or switch lender?

Moderator's note: If your mortgage is with Pepper, you do not have the option of fixing your rate (unless you switch to another lender and give up your tracker). However, in December 2022 Pepper said that it would allow some of its customers to fix their monthly repayments. (This is not the...

www.askaboutmoney.com

If you have a tracker from a lender other than the ones above, e.g., Haven, start a new thread with the name of the lender in the title.