Pleasant Surprise from Bank of Scotland Ireland

keith_d99

Took out a fixed mortgage from Bank of Scotland 3 years ago (ECB rate went up once and dropped ever since! )

Anyhow got pleasant surprise last week, saying that my new variable rate was 2.5% and payments dropped €300 per month.

Rang them to query my options and see when this was coming into effect.
They said the rate I was on is a "guaranteed" variable rate - in that is guaranteed to be 1.5% above the ECB rate.

I asked: "Like a tracker" -
Reply: "Yes"

I guess they have the right to scrap this rate, but good news for a change!

chris85

keith_d99 wrote: »

Took out a fixed mortgage from Bank of Scotland 3 years ago (ECB rate went up once and dropped ever since! )

Anyhow got pleasant surprise last week, saying that my new variable rate was 2.5% and payments dropped €300 per month.

Rang them to query my options and see when this was coming into effect.
They said the rate I was on is a "guaranteed" variable rate - in that is guaranteed to be 1.5% above the ECB rate.

I asked: "Like a tracker" -
Reply: "Yes"

I guess they have the right to scrap this rate, but good news for a change!

Be carefull as the ECB will have to go up and some stage soon and will continue to rise in the net few years. the rate of 1.5 points above ECB is good now but not as good as trackers as most were a point or less higher than ECB which the banks could do when the ECB was higher.

BOS may be replying on the ECB going up which it will in order to bring increase.

Also is there an actual guarantee thats its linked to ECB? if not they can jack up the rate when they want.

I am just a sceptic with these things. :rolleyes:

keith_d99

Ah yeah ECB is rock bottom and can only go up - this will surely happen when the EU recovers economically.

1.5% isn't as good as trackers were, but it's close enough to what it was before they scrapped them (think average was 1.25 at the end)

And yeah I am sure that there is nothing legal there to stop BOS changing that 1.5%

But a rate of 2.5% is probably the lowest variable rate out there at the moment

chris85 wrote: »

Be carefull as the ECB will have to go up and some stage soon and will continue to rise in the net few years. the rate of 1.5 points above ECB is good now but not as good as trackers as most were a point or less higher than ECB which the banks could do when the ECB was higher.

BOS may be replying on the ECB going up which it will in order to bring increase.

Also is there an actual guarantee thats its linked to ECB? if not they can jack up the rate when they want.

I am just a sceptic with these things. :rolleyes:

livingthedream

Hi Keith,

I found myself in the same situation as yourself, re-mortgaged to build extension on our house at the time when ECB was starting to creep up so opted for 3 year fixed rate (5.3%) and then subsequently watched as ECB rate plumetted

Like you I received the same letter last month and I couldn't believe my eyes when I saw 2.5%.

From the previous posts this looks like it's not quite a tracker??? Can you elaborate more? If they guarantee ECB + 1.5%, how is that different from a tracker?

How wooly is this 'guarantee'?

Unfortunately I think my copy of the mortgage details got misplaced during the chaos of the extension so I can't read the fine print...

jdivision

Presumably you signed up for a three-year non-variable interest rate and that's ended so it's reverting to market norm.

Cookie_Monster

can you up your payment by that same 300 quid to pay off more and take advantage of the lower rates now? Would be well worth it long term if they would let you.

keith_d99

Livingthedream,

Was afraid to ask any more on the phone to the customer service agent Was just happy to be on 2.5%!

Like yourself .... have no idea where my original mortgage agreement is. Could get it off my solicitor I guess. Would be good to know if the "guarantee" is legally bound.

livingthedream wrote: »

Hi Keith,

I found myself in the same situation as yourself, re-mortgaged to build extension on our house at the time when ECB was starting to creep up so opted for 3 year fixed rate (5.3%) and then subsequently watched as ECB rate plumetted

Like you I received the same letter last month and I couldn't believe my eyes when I saw 2.5%.

From the previous posts this looks like it's not quite a tracker??? Can you elaborate more? If they guarantee ECB + 1.5%, how is that different from a tracker?

How wooly is this 'guarantee'?

Unfortunately I think my copy of the mortgage details got misplaced during the chaos of the extension so I can't read the fine print...

keith_d99

2.5% isn't exactly market norm though!

jdivision wrote: »

Presumably you signed up for a three-year non-variable interest rate and that's ended so it's reverting to market norm.

livingthedream

Hmm,

I was just kinda keeping my head low too, happy with 2.5% but in light of this thread I might just see if I can get a copy of my mortgage agreement from my solicitor just to be sure....

Though I have to think now that I have indeed reverted to a tracker.... let's face it, no bank is gonna turn it's back on extra income if they can avoid it in any way.... If there was a way that BOS could charge us a higher rate then they would!

True ECB rate will rise over the coming years especially given the recent positive rumblings in the German economy but you can be damn sure that the major banks will all up their variable rates in line with any ECB rate hike...

Kennie1

What ye took out here is know as a fixed rate tracker mortgage. When ye took this out you had the option for fixing the mortgage for a set period of time at the end of that period you have 2 options

1 Fix mortgage payments for a fixed period again or

2 ECB+1.5% where ECB is variable

So don't worry the premium on ECB rate is guaranteed at 1.5%, if you want to confirm ask customer service to send you a copy of your loan agreement. If your loan was variable you would expect to pay at least 3.5% average! ECB rate is not expected to go up until the end of next year so enjoy the extra money in the mean time!!!

keith_d99

Good man Kennie - you were obviously braver than us, and asked
That is good news!!

Kennie1 wrote: »

What ye took out here is know as a fixed rate tracker mortgage. When ye took this out you had the option for fixing the mortgage for a set period of time at the end of that period you have 2 options

1 Fix mortgage payments for a fixed period again or

2 ECB+1.5% where ECB is variable

So don't worry the premium on ECB rate is guaranteed at 1.5%, if you want to confirm ask customer service to send you a copy of your loan agreement. If your loan was variable you would expect to pay at least 3.5% average! ECB rate is not expected to go up until the end of next year so enjoy the extra money in the mean time!!!

caddy16

chris85 wrote: »

Be carefull as the ECB will have to go up and some stage soon and will continue to rise in the net few years. the rate of 1.5 points above ECB is good now but not as good as trackers as most were a point or less higher than ECB which the banks could do when the ECB was higher.

BOS may be replying on the ECB going up which it will in order to bring increase.

Also is there an actual guarantee thats its linked to ECB? if not they can jack up the rate when they want.

I am just a sceptic with these things. :rolleyes:

Just to clear a few things up here. U are effectively on a tracker rate, a high tracker rate as many had margins of less than 1% but the same benefit. If you were on a standard variable without this "price promise" you would be on 3.5%+ i would imagine.
A large amount of BOSI/Halifax mortgages have this guarantee in the loan offer so they have absolutely no way of getting out of it.
As to the reference to the bank relying on ECB to raise their rates dont forget this is going to increase the banks cost of funds so this will have no bearing on the margin that they make.
So basically you have nothing to worry about:)