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Tracker Rate to Fixed

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  • 09-04-2010 1:27pm
    #1
    J-Fit
    Registered Users Posts: 472 ✭✭


    Hey I'm wondering if anyone can help. I'm on a tracker mortgage rate at the moment with ICS but with the announcement that rates are going up should I move to a higher fixed rate? Would really appreciate some input. Thanks.


Comments

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    #2
    jimoc
    Registered Users Posts: 634 ✭✭✭jimoc


    If you are on a tracker mortgage rate a bank's increases wont affect you.
    A tracker is linked to the ECB rate, not to the banks own variable rates, therefore it should only change if the ECB rate changes.
    Considering the state of Greece at the moment, I cant see the ECB rates being raised any time in the next 5 years or so.


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    #3
    J-Fit
    Registered Users Posts: 472 ✭✭J-Fit


    jimoc wrote: »
    If you are on a tracker mortgage rate a bank's increases wont affect you.
    A tracker is linked to the ECB rate, not to the banks own variable rates, therefore it should only change if the ECB rate changes.
    Considering the state of Greece at the moment, I cant see the ECB rates being raised any time in the next 5 years or so.

    Really? 5 Years? The reason I asked was because I was anticipating the ECB not waiting for the lagging economies and just getting on with things but in that case the decision is an easy one! Many thanks for that.


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    #4
    twenty8
    Registered Users Posts: 456 ✭✭twenty8


    Personally I reckon you would be mad to move off a tracker. Unless you got a very bad deal - nearly every tracker mortgage are the cheapest mortgages you can possibly get in the current climate.

    Also - banks are not offering trackers now - so if you do move off it you won't be able to get it back.


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    #5
    jimoc
    Registered Users Posts: 634 ✭✭✭jimoc


    J-Fit wrote: »
    Really? 5 Years? The reason I asked was because I was anticipating the ECB not waiting for the lagging economies and just getting on with things but in that case the decision is an easy one! Many thanks for that.

    Thats just my gut instinct, I'm not a financial analyst or anything like that :)
    But if you look at the state of things at the moment, Greece is massively screwed over, its gonna take at least 2 years if not longer to sort them out.
    By the time they get sorted out, the massive interest payments that Ireland are gonna have to making for all of this years bonds are gonna start to cripple us, and unlike the greeks, we dont have 200+ uninhabitated islands to sell off :)

    Then again, considering how quickly things fell apart in the past couple of years, it could all sort itself out a lot quicker, or the powers that be could decide to simply eject all the poor countries from the EU and get on with business.

    But no matter what happens, if you are on a tracker you will invariably be better off then anyone else, since all the other interest rates are gonna be higher no matter what. The only thing that will make a tracker worse is if someone goes on a 10 year fixed rate at for example 5% and then the ECB rate rises by over 5% before it ends. But thats so unlikely I've more chance of winning the lotto :)


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    #6
    tHE vAGGABOND
    Registered Users Posts: 6,686 ✭✭✭tHE vAGGABOND


    ÈCB said yesterday they are not touching their rates, and wont for the rest of this year most likley.

    Yes the day will come when they take a mad jump up = but not yet.

    Until that day I would not give up my tracker for [almost] anything


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    #7
    none
    Registered Users Posts: 569 ✭✭✭none


    No ECB hike for 5 years - I doubt it. Greece, Portugal or Ireland aren't so important to hold off the Euro recovery, I guess. Even Spain may not be able to warrant it. So once the Deutsch and Francais genuinely power on, the ECB will have to follow. My gut feeling predicts it will grow next year.


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    #8
    elchanco
    Registered Users Posts: 329 ✭✭elchanco


    just read an "expert" view in the examiner.. ecb will raise rates in december! i have to agree.


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    #9
    ShumanTheHuman
    Closed Accounts Posts: 50 ✭✭ShumanTheHuman


    WHO could blame people for being confused about mortgages?
    These days people have all sorts of mortgages -- trackers, standard variables, loan-to-value variables and fixed rates.
    The moves by Permanent TSB, AIB, Bank of Ireland and EBS to hike their rates just add to the confusion for many.
    As in a lot of areas of consumer finance, the complexity costs us money.
    This email is not untypical of the ones received by this journalist: "Just wondering whether you think it's a good idea to fix if you are one of those supposedly lucky ones in possession of a tracker mortgage, like myself?"
    The answer is in the question.
    With a tracker, the lender can only move the rate when the European Central Bank moves its rate.
    Last Thursday, the ECB decided for the 11th month in a row to leave its key interest rate unchanged at a record low of 1pc.
    And the indications are that the ECB is unlikely to increase from the 1pc level before the end of the year.
    It could be next year before the ECB raises its rates. That means that tracker mortgage holders are sitting pretty and should do nothing.
    For evidence of this we refer you to the bleatings of bankers that they are losing money on tracker mortgages and the fact that trackers are no longer available.
    People with a tracker have a contract with their lender that their rate will never be more than a set percentage over the ECB rate.
    Some people have trackers set as low as 0.5pc above the ECB rate. This means these lucky people will remain on an interest rate of 1.5pc until the ECB rate moves up.
    Fixing
    Others have trackers set at between 1pc and 2pc above the ECB rate.
    In fact, trackers are such good value for consumers that we may soon see a situation where lenders attempt to buy homeowners out of these deals.
    However, the mortgage holders who need to consider changing their mortgage type are those on standard variable rates.
    It used to be that standard variable rates only moved when the ECB rate moved.
    But Permanent TSB broke the mould on that one last summer. Now AIB, Bank of Ireland and EBS have followed its lead.
    People on a standard variable rate need to consider fixing now, especially if they can lock in at a rate of less than 4pc.
    - Charlie Weston
    Irish Independent
    Charile Weston in the Indo. Note the line I emboldened. I'm on a tracker and the it has crossed my mind that theoretically it must be possible for it to make economic sense for banks to buy out trackers if rates were to remain low indefinitely but assumed that the circumstances are so unlikely that they never would. This is the first occasion that I have seen a commentator raising this possibility. Is there anything to it or is it pie in the sky?


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    #10
    tHE vAGGABOND
    Registered Users Posts: 6,686 ✭✭✭tHE vAGGABOND


    In fact, trackers are such good value for consumers that we may soon see a situation where lenders attempt to buy homeowners out of these deals.
    My broker rang me some time ago warning me that some banks had contacted customers of his offering them money and a nice fixed rate for a short while to come off trackers..

    He was clearly telling me to tell them to feck off - not that I needed telling. But its nice to know someone caress :)


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    #11
    elchanco
    Registered Users Posts: 329 ✭✭elchanco


    i regret (BIG TIME) changing to a fixed rate in 2008.. rates were rising and i had to make a decision to go tracker 1.5% ecb which was 5.6% or fixed for two years at 5.7%... unfortunately i went for the fixed rate & soon after rates plummeted.. aaarrrrgghh

    I now have to make a decision to fixed or a standard variable rate!:confused:
    any suggestions!


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    #12
    Batesy
    Registered Users Posts: 1,450 ✭✭✭Batesy


    My fixed term is up now too and TSB have offered a Tracker Variable rate of 4.25% or a LTV Variable Rate of 4.05%.

    The LTV Rate works out at around €30 cheaper per month right now.

    I was a bit shocked that the tracker is ECB + 3.25% !!!!!

    I'm confused on what to do???


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    #13
    Andrew33
    Closed Accounts Posts: 1,857 ✭✭✭Andrew33


    Batesy wrote: »
    My fixed term is up now too and TSB have offered a Tracker Variable rate of 4.25% or a LTV Variable Rate of 4.05%.

    The LTV Rate works out at around €30 cheaper per month right now.

    I was a bit shocked that the tracker is ECB + 3.25% !!!!!

    I'm confused on what to do???[/QUOT

    That's pretty steep alright, my tracker is 0.4% above ECB and if the experts are to be believed the bank is LOSING money on my mortgage. haha, happy ****ing days, the dumb pricks turned me down for an overdraft which would have made them a couple of euros every month. They'll get nothing out of me now.


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    #14
    Speak Now
    Registered Users Posts: 8,504 ✭✭✭Speak Now


    Batesy wrote: »
    My fixed term is up now too and TSB have offered a Tracker Variable rate of 4.25% or a LTV Variable Rate of 4.05%.

    The LTV Rate works out at around €30 cheaper per month right now.

    I was a bit shocked that the tracker is ECB + 3.25% !!!!!

    I'm confused on what to do???

    Well i came off a 5.1% fixed so i went on the LTV 4.05% rate.
    I only saw it on line though as i was checking because i knew the fixed was up. The bank or my mortgage broker never contacted me. Won't bother now as the tracker you were offered is hardly appealing.


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    #15
    Batesy
    Registered Users Posts: 1,450 ✭✭✭Batesy


    Yeah the LTV 4.05% is available to me too but if you had the choice of the Tracker 4.25% and the LTV 4.05% whats the best option...........going forward. :)


  • Options
    #16
    Grinds QFA
    Closed Accounts Posts: 1 ✭Grinds QFA


    Under no circumstances move from a tracker rate to a fixed rate. The tracker rate GUARANTEES that you pay a set % above the ECB rate whereas you will eventually have to come off the fixed rate and then the lender will be able to charge what he wants, The banks etc would love to get people off tracker rates because they are loosing money i.e. they are paying more to borrow money than they can charge you as they have to wait for the ECB to raise rates before they can put up their rate and even when they put it up they can only charge whatever the ECB has raised it by. If the ECB puts up the rate .25% then they can only put it up by .25% if they get you back onto the variable rate they can increase it by any thing the want. Hope this helps.:cool:


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    #17
    Toots
    Administrators, Business & Finance Moderators, Society & Culture Moderators Posts: 16,905 Admin ✭✭✭✭✭Toots


    Andrew33, there is no need for that sort of language. Please read the charter before posting and refrain from using offensive language on this forum.


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    #18
    shanemort
    Registered Users Posts: 234 ✭✭shanemort


    Stay on your tracker for ever if you can........


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    #19
    tomcat01
    Closed Accounts Posts: 1 ✭tomcat01


    3.25% tracker rate sounds unusually high. I just come off 2 year fixed rate of 6% recently and have being offered a tracker rate of 2.4% + 1% ECB rate from Ulster Bank. I would be inclined to talk to them again.


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