Rates down-mortgage up ?

[davcot]

I am with PTSB on ECB + 0.95%. Original loan € 106,900, remaining balance € 103,200. I received a letter two days ago saying that my interest rate had dropped from 4.2% to 3.45% in line with ECB cut of 0.75%. However they are looking for €14.00 more than last month. The call centre said it was due to a change in TRS. I do not understand this. We are in year 3 of our mortgage, so TRS should be going up to 22.5%. As TRS is a percentage of the interest charged, and the interest charged is dropping how can my repayment rise?

 

[sandrat]

probably because you are not getting charged as much interest in total. say for example you paid 5000 in interest last year and this year are only due to pay 4000 due to interest rate cuts then you are getting relief on less therefore the monthly amount of relief is less therefore your repayment can still be more

 

[Guest110]

Hi,

I was on the phone today with TSB for my mortgage which I have about 3 years. I was on a tracker and got it fixed for 3 years, they are letting me go back onto the tracker mortgage early without a penalty and I save myself 60 Euro a month. They are reducing mine to 4.15%, not sure why they are not giving my account the same interest rate as yourself ....

 

[z101]

sound like you are not getting FTB TRS which was increased as of jan 1st, but rather normal TRS which was reduced from 20% to 15% as of Jan 1st. Call your provider

 

[twofor1]

I am with PTSB on ECB + 0.95%. Original loan € 106,900, remaining balance € 103,200. I received a letter two days ago saying that my interest rate had dropped from 4.2% to 3.45% in line with ECB cut of 0.75%. However they are looking for €14.00 more than last month. The call centre said it was due to a change in TRS. I do not understand this. We are in year 3 of our mortgage, so TRS should be going up to 22.5%. As TRS is a percentage of the interest charged, and the interest charged is dropping how can my repayment rise?

This question has come up here before and I have never seen a satisfactory answer. On my tracker and variable mortgages, every time interest rates go down, my repayments go down, when rates go up my repayments go up.

A reduction of .75% on a mortgage of €106K over say 20 years should reduce your monthly repayments by approx €40. If your term is more or less, the same principle applies, repayments should not go up when interest rates come down.

TRS as you say is only a percentage of interest paid (you say 22.5%), if this is the case you should save €40 in interest but only loose approx €15 in TRS, so your overall monthly repayment should reduce by approx €25, not increase by €14.

If they said it was to do with an introductory offer, insurance, mortgage protection, or if they said the term is reduced, this might explain the increase.

No doubt there is a reason, but I cannot see how a change in TRS is the correct answer to the question asked in this case.

If it was me I would not accept the answer given, and would insist on a full explanation as to why exactly my repayment has gone up, when the interest rate applied to my mortgage has come down.