breaking out a fixed rate mortgage

Maximus152

Frequent Poster
Messages
173
Yes I know, what is best value at present an ECB tracker or a variable rate, with out going into future economis speculation I have a belly full of that, I assume Tracker, lets say on a 1000 per month mort?
 

NorfBank

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2,103
Some would argue that you have to look at the margin on the tracker.
At the moment the best variable is 3.25% which is 1.25% above the ECB. This would be equivalent to an ECB + 1.25% tracker.

Personally I would prefer an ECB + 1.75% (3.75%) tracker to a 3.25% variable as you are guaranteed all future interest rate reductions on the tracker plus you will know exactly by how much the tracker may increase. Your rate will not be decided by the financial situation at your lender.
 

Maximus152

Frequent Poster
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173
Okay well explained Norfbank, so in another direction, which would a bank rather you had with them on thier books an ECB (even if off the menu) or a Fixed/Variable morgage rate, than I would do the reverse obviously!
 

NorfBank

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2,103
Banks would rather have you on a fixed rate or variable as on either of these money supply shouldn't affect them. They have locked in a rate when the customer goes fixed and with a variable, if the cost of borrowing money increases they can just increase the variable. On a tracker they cannot increase the cost to the customer until the ECB raises the base rate.

This can be evidenced by the fact that some lenders are allowing customers on fixed rates reverting to tracker rates to break out of the fixed rate without penalty.
 

Maximus152

Frequent Poster
Messages
173
Thanks Norf. Vixen I am on a tracker, I do not want to loose it. I have a 2nd home which I rent in my home town have in 10 years was willed to me and brother and I borrowed and bought him out (old 3 bed). Anyways I put that on a interest only, and my own home was on tracker. Now the interest only)mort (2nd home) has ended Im paying way more (house is nt worth it). The banks would only let me change back to interest only on 2nd home for 1 year if I came off Tracker mort on my own home... why I never knew.
 

Watcher

Registered User
Messages
45
Quote:
Originally Posted by Watcher
I'm on a 2 year fixed at 4.75% with PTSB. I rang them about 2 weeks ago and asked could I move to variable. They agreed and moved me once I sent it in writing within 20 days.
Now that I'm on variable I have a meeting with AIB to discuss transferring to them.

Bronte: I'm not sure about this (and I'm not a fan of the banks) Aren't the PTSB being very good to you so why would you switch or am I missing something.

Watcher :
Reason Im switching to AIB is that the PTSB moved me from 4.75% fixed to 4.15% variable. I can get a much lower variable rate from AIB (3.4% variable) and they have also offered me the option of 2.8% 2 year fixed.
 

dubrov

Frequent Poster
Messages
134
Bottom line all is that banks will not let you switch for free from a fixed to a variable unless it is in their interest to do so. Banks aren't doing this as you are a valued customer or because they want to help you out.

Tracker rates at the peak were about +.75% while variable rates are on average about +2% at the moment. Be very careful you don't switch from fixed to a variable to save a couple of percent for a couple of years only to end up paying 1% or more extra a year for the remaining 20 odd years.

I would make sure to ask them what you are giving up from your current contract by switching and get it in writing so that if there is something you missed then at least you might have some recourse.

To be honest, I can't see any reason to ever switch from a fixed to a variable rate. AS far as I can tell, the bank will just charge you what it is losing out on and then maybe some administration fee on top.
 

Petal

Frequent Poster
Messages
867
Well, I've said this in other threads already, but I asked PTSB a while ago about breaking out of my fixed rate (4.75) and penalties involved, they said I could break out, no penalties and go on a variable of 4.65 (at that time). I then asked about would I fall back on the tracker if I stayed on the fixed and they said yes, but the tracker wasn't available if I broke the fixed rate. I checked my loan agreement and it does indeed say that I would revert to tracker (but I have to instruct them thereof).
 
C

CleoD

Guest
Very interesting topic, I am currently in the middle of switching from PTSB to AIB. I am fixed at 5.5% for 5 months until end July 2009. I got a figure 21 Jan €454 to exit and 4 weeks later after a .5% reduction in variable I was given a fee of €1566. Can't believe some people have been quoted zero, anyone know how I can get that. I am having some trouble getting the information on how they came up with these fees and will be fighting them, getting the documents from my solicitor to see what it says there about an exit fee.
 

agapanthus

Frequent Poster
Messages
95
apparently according to yesterdays paper it is because of an error in their computer system that people are being quoted no penalty, paper said they have suspended letting people break fixed rates until they fix the system to reflect the correct penalties. Also said all quotes given out in writing will be honoured.
 

Ret45

Frequent Poster
Messages
70
I have a tracker mortgage, currently at .7% above ECB rate.

I am very strongly considering moving to a 10 fixed rate at around 4.5%.

The US and Europe are drowning in a sea of debt. This debt will have to be paid off and devaluation and inflation is the time honoured way of managing this. At some point point over the next 10 years I expect inflation and interest rates to rise sharply - rates of 20% are possible given the level of money printing which is now taking place by the Fed.

If you are already on a fixed rate you should consider keeping it. Rates may go down one more time, after that the only way is up.
 

chrisboy

Frequent Poster
Messages
684
I have a tracker mortgage, currently at .7% above ECB rate.

I am very strongly considering moving to a 10 fixed rate at around 4.5%.

The US and Europe are drowning in a sea of debt. This debt will have to be paid off and devaluation and inflation is the time honoured way of managing this. At some point point over the next 10 years I expect inflation and interest rates to rise sharply - rates of 20% are possible given the level of money printing which is now taking place by the Fed.

If you are already on a fixed rate you should consider keeping it. Rates may go down one more time, after that the only way is up.

I'd sell my soul for a tracker, ecb +.7%!
 
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