Moneysherpa.ie founder Mark Coan said the figure was based on Central Bank data regarding current “average” tracker mortgage rates – the main European Central Bank (ECB) rate plus 1.15 percentage points – adjusted for recent increases by the ECB.
@Mark Coan Is this figure (3.17%) the APR? Which lender and rate does it refer to?the best available four-year fixed mortgage rate product in the market, which is available at 3.17 per cent
At least not to fix for only 3 or 4 years.I would be reluctant to tell anyone with a tracker margin of 1.15% (which is pretty good) to fix their rate.
BOI had the lowest 4 year rate (high value-green) of 2.15% but I believe the APR is 3.7%Tracker mortgage holders can save by switching, says consumer finance adviser
Moneysherpa.ie claims average tracker mortgage customer could save over €5,500 by moving to the most competitive fixed rate in the marketwww.irishtimes.com
I would be reluctant to tell anyone with a tracker margin of 1.15% (which is pretty good) to fix their rate.
@Mark Coan Is this figure (3.17%) the APR? Which lender and rate does it refer to?
Citing Irish Central Bank data showing that the average mortgage outstanding amounts to €132,000 and has 15 years left, Moneysherpa.ie says this average homeowner could save €31 a month, reducing their regular mortgage payment from €953 to €922 by switching to the best available four-year fixed mortgage rate product in the market, which is available at 3.17 per cent.
These are Central Bank figures so they are not wrong per se but they are not really relevant to tracker mortgage holders coming to terms with significant rising mortgage costs.
Figures available from the Central Bank show that, as of last September, the average outstanding balance on an Irish tracker loan on a family home was just under €81,500.
And given that tracker mortgages were phased out over 14 years ago – the last products were pulled in October 2008 – the average term outstanding on tracker mortgages is certainly below 15 years.
If you assume the average length of time left on such loans is a more realistic 13 years, that figure [of saving more than €5,500] drops to slightly over €2,800.
And that’s before the legal and valuation costs incurred in switching which would amount to €1,500 or more. So yes, savings are possible but more modest.
For those on lower tracker margins – and there are many – any saving disappears as of now.
So is it worth abandoning your tracker? There is no “one size fits all” answer. It depends on how much you owe, what interest rate you are currently paying, what alternative rates are available to you at the time you are considering the issue, how long is left on the loan and the future direction of interest rates.
You are right of course that trackers came in all shapes and sizes but perhaps the term "typical" is useful here.There are very few "average" mortgages, so using averages is about as meaningless as APRC, outside of theoretical conversations.
Hi Paul, apologies only seeing this now. The 3.17% we used in the examples is the APRC on the AIB 4 Year rate versus the current average tracker rate of 3.65%.@Mark Coan[/USER] Is this figure (3.17%) the APR? Which lender and rate does it refer to?
Tracker Example Fixes | Current APRC | New rate APRC | Remaining Loan | Remaining Term | Current Value | Current Repayment | New Average Repayment | Monthly Saving | Total Repayment Old | Total Repayment New | Total Saving | ||
Average Tracker @ 2.5% | 3.65% | 3.17% | €81,322 | 15 | €300,000 | €587.37 | €568.27 | €19.10 | €105,726 | €102,288 | €3,438 | ||
Average Tracker @ 3.0% (Feb '23) | 4.15% | 3.17% | €81,322 | 15 | €300,000 | €607.66 | €568.27 | €39.39 | €109,379 | €102,288 | €7,091 | ||
Average Tracker @ 3.5% (March '23) | 4.65% | 3.17% | €81,322 | 15 | €300,000 | €628.36 | €568.27 | €60.09 | €113,105 | €102,288 | €10,817 |
Surely you know from previous experience that a lot of people just won't do anything, no matter how much attention it gets? How many times did PTSB write to customers on SVR offering to move them to cheaper MVR, and still lots never moved? Look at the thousands of customers that have stayed on SVRs with BOI even though its been cheaper for them to fix since 2014.I still don't think there is enough coverage of the potential cost/risk of mortgage holders remaining on variable/trackers to overcome the level of inertia, which may result costing households thousands at a time they are already under pressure financially.
This is where we disagree. APRC is outright misleading.using the APRC isn't fool proof
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