Trading up. move ptsb tracker or switch to BoI fixed?

Keengardener1

Registered User
Messages
12
Urgent Advice required

We are trading up ( house too small)
We have tracker with PTSB in existing house @ 1.68 % @ € 215k

They offering us uplift @1% to keep tracker and new portion of loan will be at standard variable rate IE

New house €535k
We putting €180k towards it
So total finance required €365k

PTSB offering portable tracker
* €215k @ 2.68 @ 20 years ( years remaining on existing mortgage
* €150k @ 3.2 for 31 years
Works out @ €1800 per month for the 2 loans

BOI

We have alternative offer with BOI
3 year fixed at 3%
€ 365 k @ 3% for 25 years - € 1723pm
But we get cash back 2 % €7,300
And year 5 another €3650

Or at 30 years with 3 year fixed @ 3%
€365k - €1530 repayments

What are people's views in best option .
Myself and partner are 40 years with 3 children . We will have childcare of €1000 per month for the next 5 years so I'm thinking I might go BOI for 30 years and take cash Back to make the move more affordable in the short term while our outgoing Are high - but am I mad leaving a tracker product .

Pros and cons required
 
I think the simplest way to look at this is to calculate the Year 1 interest cost on both options (ignoring amortisation) and to treat any cash-back offer as a reduction of the amount borrowed. It's not exact but it gives you a reasonable figure to work off.

So the interest on the PTSB's offer is €[email protected]% + €[email protected]% = €10,562 and the BOI offer is 97% of €365k@3% = €10,622.

There's obviously not much difference between the two so if the payment certainty and cash-flow benefits of the BOI offering appeal to you then that might be the better option.
 
The correct way to look at this is as follows:

1) Irish lenders are overcharging both fixed and variable rate customers by about 1.5%.
At some stage this will have to stop.
Therefore it's wrong for someone who can shop around to fix their mortgage rate at all, but particularly wrong to fix for three years.

2) What is the best deal on the market for someone borrowing 68% Loan to Value?

3) Is the permanent tsb deal better than that?

So let's look at 2) and 3) in more detail

2) What is the best deal excluding ptsb?

The best deal is EBS at 3.5% with 2% cash back which is €7,300
Or Ulster Bank 3.1% with €1,500 legal fees

If you go with EBS, you will get €5,800 up front but you will pay €1,460 a year more interest.

Hard to know which is the best. Ulster Bank is competing on rates, so my guess is that they are likely to remain cheaper in the long-term. EBS has recently introduced the cash back, and I would imagine that they will try to recoup this through not passing on rate cuts.

If you go with EBS and the gap widens, you could switch to Ulster Bank or some other lender, if your personal circumstances don't change.

3) How does the EBS deal compare with Ptsb?

The average rate from ptsb is 3.1% ([email protected] [email protected]/365)

Will they not give you the 2% cash back on the €150k? Assume that they will give you €3,000

So the result is

ptsb: €3,000 + 3.1%

EBS: €7,300 + 3.5%

So for €4,300 cash now, you will pay an extra 0.4% or €1,500 a year.

Ptsb has a terrible record of treating existing customers - as has Bank of Ireland and KBC.

EBS and AIB has a good record, although they are planning to differentiate EBS from AIB and I think that may lead to higher rates for EBS customers.

Conclusion
It's close, but I would go for EBS and watch how rates change over the years and be prepared and ready to switch if EBS does not stay competitive.

If ptsb does not give you 2% cash back on the extra money borrowed, it tilts it more towards EBS.

What if EBS or Ulster Bank rejects you for the loan?
Go with ptsb instead of BoI. You should not fix for three years and BoI doesn't seem to quote variable rates any more.

Brendan
 
The average rate from ptsb is 3.1%
Is the weighted average rate with PTSB not 2.89% (€[email protected]% + €[email protected]% = €10,562/€365,000)? Or is 3.2% a one year discounted rate?

According to their T&Cs, PTSB's 2% cash back offer does not apply to tracker movers, including any additional funds that may be drawn down.

By my calculations, BOI's cashback offer is worth €10,450 (assuming a 25 year term). They also do a 1-year fix @3.2%.
 
Thanks for replies

PTSB are offering on the €150k @ 3.2 discounted for 1 year , they sent me their current rates and it looks like there standard variable rates after that are 4 % so I am assuming it will revert to that.

PTSB will not give any cashback even on the new part . I have checked that numerous times . I suppose with plus with PTSB is that I will be finished loan 1 in 20 years and the second loan will continue on for a further 10 years

I'm afraid I still don't know why a fix with BOI at 3% for 3 years is a bad option - do you think that other banks will go lower than 3 % rate .
Or is it that once the fixed period ends the BOI variable rates tends t be really high in comparison to other banks .

I thought ECB have stated that the rates will increase hence even my PTSB tracker will increase

Brendan Regarding the EBS rate @3.5 are you more recommending that option as its a more customer friendly bank regarding rates ?
 
Or is 3.2% a one year discounted rate?

Not sure where that rate is coming from. I used the rate on their website for an LTV of 68%.

By my calculations, BOI's cashback offer is worth €10,450 (assuming a 25 year term). They also do a 1-year fix @3.2%

My basis premise is that no one should take out a mortgage from Bank of Ireland unless no one else will lend to them, as they openly admit to artificially high variable rates.

Brendan
 
Hi Gardener

Irish mortgage rates from all lenders are 1.5% above the rates in other eurozone countries. This differential will be reduced either through competition or through legislation.

if you have fixed for three years, you won't benefit from that.

When rates come down, both fixed and variable rates will come down. So you should be then able to fix at much lower rates than 3%.

Brendan
 
Irish mortgage rates from all lenders are 1.5% above the rates in other eurozone countries. This differential will be reduced either through competition or through legislation.

if you have fixed for three years, you won't benefit from that.

When rates come down, both fixed and variable rates will come down. So you should be then able to fix at much lower rates than 3%.

Brendan

Any timeframe of when u think this should happen ?

We are closing the house in the next 6 weeks so I don't think the EBS option will be a runner for us .

- if I continue with PTSB do you think it could be the case I could have higher trackor rate than SV rate
 
Last edited by a moderator:
Hi Gardener

I thought it would have happened before now.

It will happen, even if I don't know when.

I have no idea why EBS is not a runner if you have 6 weeks?

It's possible that non-tracker rates would fall below tracker rates + 2.68%. If they do, then you would probably switch to another lender.
Or you might value the guaranteed margin of 2.68%.

Brendan
 
Hi Brendan

Your view a couple of years ago was that nobody should fix @ any rate above 3%. Would it be fair to assume that your view now is that nobody should fix @ any rate above 1.5%, regardless of any cash back offer or arrangement fee? Or how would you frame this advice now?
 
It's not easy, but I would not fix for 3 years. You can get cash back and comparatively low variable rates from EBS.

If you have an existing mortgage and don't want to go to the hassle of switching, should you fix? No, except for a one year with BoI.

I don't expect fixed rates to drop to 1.5%, but if they dropped to 2%, then I think someone should fix.

Brendan
 
I certainly agree that it's not easy to frame advice at this point in the cycle.

At the end of 2016 nearly 30% of BoI mortgages were on (non-tracker) variable rates. Frankly, I find that extraordinary when you look at BoI's variable rates.

Average Eurozone fixed rates are currently around 2%. However, mortgages on the continent typically come with arrangement fees (often up to 1% of the sum borrowed) and there are other structural differences in terms of how home loans are constructed that complicate any cross-border comparison.

Personally I think a fixed rate of ~3% with a 3% cash back offer is starting to look interesting and is not a million miles off EZ average borrowing costs. That's not bad for a country with default rates that are more than 3 times the EZ average.
 
Last edited:
Assuming that I don't have enough time to go down the EBS route with closing date so close Etc

If I stay with PTSB and the Trackor rate increases (which there are indications ) I could be up at tracker rate of + 3% and What ever the SV is at the time which looks likely to be 3.7 % after year one .
However there is nothing stopping me from switching in a years time to avail of what ever is the lowest SV rate from all providers so maybe that's the thing to do

I just would have loved to get the cashback offer !!
 
I am not sure what you mean that "tracker rate increases"

If you have a non-tracker variable mortgage, lenders are free to increase or reduce the interest rate at any time. I would imagine, that when the ECB rate next rises, they will increase non-tracker mortgage rates again.

If you have a tracker, they will be limited to the increase in the ECB rate.

I do expect that competition or legislation will bring down non-tracker rates. I expect this to happen before the ECB rate rises again. Having said that, I have been wrong before in my forecasts.

Brendan
 
Back
Top