Tracker Rate or Fix

[Keithf]

Hi - I have a split rate mortgage with KBC
A - 2.5% tracker remaining term 15 years balance 160k
B - 2.45% 5 year fixed 21 years left balance c 170k

Monthly repayments c 1850

Considering potential rate rises I am considering switching to a 5 year fixed green rate with say AIB at c 2.15% with monthly repayments of c 1650 or others banks at c 2.45%. Most fixed rate offers result in slightly reduced payments but main concern is potential rising rates and repayments on the tracker.

Does this make sense over the long term or is the 2.5% tracker still considered good value? KBCI “strongly advise” me not to move off tracker

Thanks
KF

 

[Black_Knight]

Isn't all the talk of late about ECB rates going up? So your 2.5% tracker could be 3% later this year. Swapping a 2.5% tracker for 2.15% and coming out of it with 10 years remaining isn't bad IMO. In 5 years time with ECB rates going up, will your tracker is better value?

 

[Keithf]

Hi Black Knight
Thanks for your response. My gut tells me the prudent decision is to switch to a fixed. However, consistent advice has been to hold on to a tracker, including advice from KBC. I have been wondering am I missing something in terms of value over the medium to long term.
I forgot to mention, KBC have confirmed no breakage fee for the fixed.

Thanks again
KF

 

[peemac]

Hi Black Knight
Thanks for your response. My gut tells me the prudent decision is to switch to a fixed. However, consistent advice has been to hold on to a tracker, including advice from KBC. I have been wondering am I missing something in terms of value over the medium to long term.
I forgot to mention, KBC have confirmed no breakage fee for the fixed.

Thanks again
KF

You seem to have a mover tracker or some other tracker that is priced about 1.5% points over most other trackers.

Your rate with KBC will never go under 2.5% and will rise the minute the ECB increases rates.

It's also a higher margin than most banks are charging for most fixed rates.

So in your case, due to the high tracker margin, you should switch immediately.

 

[Brendan Burgess]

A 2.5% tracker is not really worth that much.

KBC has to strongly advise you not to switch it. Because if you do and it turns out to be cheaper in 10 years, you could come back and say that they encouraged you to switch.

Brendan