What were people saying about trackers in 2005?

Brendan Burgess

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In another thread, someone said that the advantages of trackers were not anticipated back in 2005. So I went through a few old posts to see what was actually been said. There are links to threads such as "Is there a catch with trackers?" but those threads are no longer available.

It seemed assumed on askaboutmoney that trackers were the best, but that might also be because BoSI and Ulster Bank trackers were lower than the other banks.

Here someone is wondering whether trackers will still be available after the one year fixed rate


I think I should go with 1 yr. fixed first & after 1 Yr. move to Tracker (whatever the rate at that time!). Is there a possiblity that there won't be tracker at all after 1 yr. In that case my decision of going with 1 yr. fixed rate might back fire... what do you think?
And this one reports that AIB were proactively calling people to switch them to trackers



AIB are suggesting that I change over to a tracker mortgage from my current variable rate mortgage. My mortgage is now below a certain percentage of the house value and it looks like I could get a lower rate if I change.

Can someone explain the difference, together with pros and cons, between a tracker mortgage and standard variable rate mortage. I'm a bit suspicious of their reasons for suggesting a change; I find it hard to believe they are actually trying to save me money!!
And another poster:

I am an AIB customer as well and I'm currently changing from the standard variable to their lower tracker rate. Speaking to a member staff in AIB today. They are calling all their variable rate mortgage holders and advising them to switch to the new tracker rate.
No catch involved.

And Clubman provided links to posts which are no longer available, but summarised them as follows

In short a tracker is just a variable rate which guarantees the margin above the base ECB rate which the lender will charge which means that changes in the base rate will be passed on immediately. Variable rate mortgages don't offer any guarantees on margin charged or when rate changes will be passed on. Basically all other things being equal (in particular assuming a competitive rate in the first place) a tracker rate is simple more transparent (in terms of margin charged) than a variable rate.
It's also interesting that people were suspicious of tracker mortgages?


I currently have a variable mortgage with AIB 4.95% APR. Looking into changing to a Tracker. I would fall into the LTV range of 50-80% which is 4.58% APR.

Is there any reason why I should not change to a Tracker and why does everybody not get a Tracker in the first place?
 
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Ceist Beag

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We switched to a tracker in 2005 and I very much remember us doing so on the back of advice provided on AAM and thinking that it was a no brainer. So I very much dispute that the advantages of trackers were not anticipated back in 2005. They were very much anticipated to anyone on here.
 

Brendan Burgess

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I see here that Dinarius switched from EBS to AIB because EBS told him that they did not do tracker mortgages.

 

Brendan Burgess

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We switched to a tracker in 2005 and I very much remember us doing so on the back of advice provided on AAM and thinking that it was a no brainer. So I very much dispute that the advantages of trackers were not anticipated back in 2005. They were very much anticipated to anyone on here.
Hi Ceist Beag

That is very helpful and I found the record here:. You switched from AIB. AIB did have trackers at the time, so it must have been for a cheaper tracker rate.

 

aristotle

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I was on a AIB tracker in 2005 and moved to a then NIB (later became Danske Bank) Tracker in May 2007 to save another .4% on interest.

I remember some people saying whats the rush, there will be another better deal around the corner. Sometimes you have to take a good deal when you see it. Well, there was no better deal than the .5% margin offered by the then NIB.

Many others didnt know what a tracker mortgage was, like the famous ad :)
 

Brendan Burgess

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It's very clear that some informed posters wanted only trackers. The advantages were such that they didn't need to spell them out.


Brendan
 

demoivre

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And Clubman provided links to posts which are no longer available, but summarised them as follows

In short a tracker is just a variable rate which guarantees the margin above the base ECB rate which the lender will charge which means that changes in the base rate will be passed on immediately. Variable rate mortgages don't offer any guarantees on margin charged or when rate changes will be passed on. Basically all other things being equal (in particular assuming a competitive rate in the first place) a tracker rate is simple more transparent (in terms of margin charged) than a variable rate.
There, I always knew a tracker was just a special type of variable rate. Now if the FSPO agrees that could have implications for many of the appeals he is dealing with.
 

so-crates

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I took out my mortgage in 2005 and I didn't even consider a variable or fixed and immediately opted for a tracker because I felt that it was taking the control away from the bank. The relationship is asymmetric, they set the terms, they apply the penalties and as a customer you have little control over the relationship. I felt it was better that the bank wasn't the sole arbiter of what I had to pay. In my mind, the advantage to the bank was that they could point the finger at someone else for rate rises but I liked that they were not the ones setting the rate, it tied them down as much as it tied me.
 

Dinarius

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I see here that Dinarius switched from EBS to AIB because EBS told him that they did not do tracker mortgages.

We never managed to get a tracker. I can't quite remember why. But, I do know that AIB refused us.

However, we do have a buy-to-let at the normal mortgage rate, not the buy-to-let rate.

You win some, you lose some.

D.
 

ClubMan

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There, I always knew a tracker was just a special type of variable rate. Now if the FSPO agrees that could have implications for many of the appeals he is dealing with.
It's hardly any surprise or mystery that a tracker is/was simply a form of variable rate albeit linked to the relevant underlying ECB rate and with a guaranteed margin as opposed to the rate charged being totally at the discretion of the lender who can change it at will either way at any time?

I'm not really sure why most or all standard variable rate mortgage contracts are not deemed unfair to the consumer since they give the lender total and absolute discretion as to what they can charge and when they can alter it - e.g. wholesale rates could fall and they lender could legitimately *increase* their rates under such contracts.
 

B26354

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At the beginning of 2008 EBS confirmed themselves why trackers were a better option than SVR and why they were offering them to customers instead of SVR’s. 9 months after Dara Deering said this EBS pulled trackers off the market.
 

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Protocol

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I got a tracker from NIB in 2005, at 0.79% margin.

I'm sure that I knew the benefits of trackers.

Indeed, I recall explaining them at work.

I then moved to NIB's LTV tracker at 0.5% margin.

I recall saying to the bank official - "you will make less from me".

He replied: "but we will attract other customers"
 

aristotle

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That reminds me of what the NIB person said to me when I said how good a rate it was. He expected to sell more personal loans, credit cards and more investment products.

It sounded like the tracker was way of just acquiring customers for all their other bank products.
 

Brendan Burgess

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I suppose that the decision was fairly easy if it was between a tracker at 5% and an SVR at 5%. You were getting the guaranteed margin free of charge.

The problem was for those people who were worried about rates rising and fixed at 5.5% instead of opting for a tracker at 6%.

It would be interesting to see a discussion of "fixed vs. tracker" from that period.

While I think that most people on askaboutmoney appreciated the value of having a guaranteed margin, we did not realise just how valuable trackers would become. We could not have anticipated that Ireland would end up with the highest mortgage rates in the eurozone.
 

Brendan Burgess

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Here is what EBS said about their new tracker rate in 2004. Notice they were priced at same rate as the SVR.
I remember speaking from the floor at an EBS AGM.

I was a huge supporter of mutuality. And I had always recommended EBS as the lender which would probably be the cheapest over the longer term.

But I said that I could no longer recommend them as Bank of Scotland was much lower. They replied "You must look at value over the longer term"

I told them that the BoSI rate was a tracker, so it was probably always going to beat the EBS.

Brendan
 

B26354

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I’m assuming your comments were made prior to EBS then introducing a tracker rate to compete with BoSI?
The timeline of comments by EBS management have always intrigued me:
2004-Mcgoverns comments that EBS were introducing a tracker product
2008-Dara Deering stating that SVR’s were a rip off and trackers were better value
2016-Alan Merriman stated EBS didn’t offer many trackers and pushed a fixed rate & SVR.

So I don’t know where all their tracker customers went to.

Also interesting to hear what banks were saying about trackers between 04-08 and how they have changed their tune more recently. Sounds like history being re-written.
 

Sunny

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It would be interesting to see a discussion of "fixed vs. tracker" from that period.
I think this is the key point. There was very little fixed mortgage market for a few years when rates were low but there was no doubt that in 07/08, mortgage rates were climbing. People forget we were at an ECB rate of 4.25% in 2008. If there fixed rates of 5% at the time, I would imagine a lot of people gave up trackers and without hindsight, would have been an interesting discussion at the time. My own memories is that seemed to be strong consensus that trackers should not be given up.
 

Brendan Burgess

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. My own memories is that seemed to be strong consensus that trackers should not be given up.

That is mine too. But I would like to find a discussion of it on Askaboutmoney.

I do seem to remember some people who had fixed gloating about it a year or two into the fixed period, on the grounds that the variable rates had risen, and they had made the right choice.

Brendan
 
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