Early Crimbo present for tracker mortgages

D3PO

as expected the ECB cut their base rate by .25% to a record low of .25% today.

more pain for the banks but joy for tracker holders.

stevedublin

D3PO wrote: »

more pain for the banks but joy for tracker holders.

how is it pain for the banks?

Ray Palmer

stevedublin wrote: »

how is it pain for the banks?

They lose more money on the trackers than they currently are. They borrow at a different rate to the ECB.

D3PO

^^

This

toby2111

More pain for those of us with variable rates.......no doubt AIB,BOI etc hike them soon now to pay for this.

D3PO

toby2111 wrote: »

More pain for those of us with variable rates.......no doubt AIB,BOI etc hike them soon now to pay for this.

Id expect them to hold firm for the moment tbh. There will probably be enough movement in interbank rates for them not to have to do so in the short term at least.

Although a rise in the next 2 quarters in variables is certainly on the cards.

toby2111

Yeh,I fully expect at least 1 increase if not more next year......Disaster

D3PO

toby2111 wrote: »

Yeh,I fully expect at least 1 increase if not more next year......Disaster

yeah my view would probably be a half point increase by the end of last year on variables.

mcko

More money for me:D

GetWithIt

D3PO wrote: »

yeah my view would probably be a half point increase by the end of last year on variables.

Not really going out on a limb there.

D3PO

GetWithIt wrote: »

Not really going out on a limb there.

LMFAO

Of course I meant next year . Touche

benny79

Hi Lads IM on variable rate mortgage with EBS have my mortgage 8 years now. Thing is my repayments are now 920E(considering the rated is at a all time low) roughly a month my mortgage was 175,000 over 30years. when I started out it was only 760E

All my mates are only paying around 600E on a 200,000 mortgage's over same period and are not on a tracker but with different banks etc

I rang the EBS and they told me everything was Fine and that my mates could have different circumstandises!!

Just seems to be going up and up even though the rate is going down?

Scortho

benny79 wrote: »

Hi Lads IM on variable rate mortgage with EBS have my mortgage 8 years now. Thing is my repayments are now 920E(considering the rated is at a all time low) roughly a month my mortgage was 175,000 over 30years. when I started out it was only 760E

All my mates are only paying around 600E on a 200,000 mortgage's over same period and are not on a tracker but with different banks etc

I rang the EBS and they told me everything was Fine and that my mates could have different circumstandises!!

Just seems to be going up and up even though the rate is going down?

That's because you have a variable rate mortgage.

Zamboni

benny79 wrote: »

Hi Lads IM on variable rate mortgage with EBS have my mortgage 8 years now. Thing is my repayments are now 920E(considering the rated is at a all time low) roughly a month my mortgage was 175,000 over 30years. when I started out it was only 760E

All my mates are only paying around 600E on a 200,000 mortgage's over same period and are not on a tracker but with different banks etc

I rang the EBS and they told me everything was Fine and that my mates could have different circumstandises!!

Just seems to be going up and up even though the rate is going down?

You would have to look at all of the variables to compare and see where the difference lies. LTV, bank rates, Start Date etc.
If they are on variables maybe the put down some lump sums along the way. Lots of possible differences.

benny79

they done nothing out of the ordinary we all bought around the same time they are all on varable rate mortgage's at the time you had to pay 8% desposit that was it.

Its just everyone I say it to about how much my mortgage is thinks that it is alot and cant be right yet I rang the EBS and they said theres nothing wrong.

so, I was just wondering why my repayment seems much bigger and are all over 30 years and bought in the same year give or take 1, If they were on tracker mortgages fair enough but they're not!

D3PO

Benny it can be right. Different banks have different variable rates. AIB's variable is far less than EBS's variable rate for example which will account for the difference your paying versus the difference they are paying.

just to add I know people who told me they weren't on a tracker and when I looked into it they were they just didn't know it. You would be surprised how many people have no idea what rate or what contract they signed with the bank re their mortgage was.

its actually very scary !!

benny79

I suppose your right! all I know is Im a a variable rate and theres only that and fixed with the EBS. They were the lowest rate at the time but they never mentioned or offered a tracker mortgage to me at the time which really pisses me off, but they probably were nt doing them at the time! they dont even do mortgage breaks, you can go interest only for a few months which is only about 150E cheaper!

Plus I taught all variable rates were roughly the same.

D3PO

benny79 wrote: »

I suppose your right! all I know is Im a a variable rate and theres only that and fixed with the EBS. They were the lowest rate at the time but they never mentioned or offered a tracker mortgage to me at the time which really pisses me off, but they probably were nt doing them at the time! they dont even do mortgage breaks, you can go interest only for a few months which is only about 150E cheaper!

Plus I taught all variable rates were roughly the same.

I can tell you for a fact they were offering tracker mortgages then as I rejected a tracker mortgage offer from them in 2005 (so around the time you bought) and took an offer with AIB instead as it was a far superior offer in regards to the terms of it.

DuckHook

I love my tracker..

benny79

all I was advised was to go on a fixed term for a year never even mentioned or explain a tracker to me! and the only reason I went with EBS was the had the cheapest rate at the time!

murphaph

benny79 wrote: »

all I was advised was to go on a fixed term for a year never even mentioned or explain a tracker to me! and the only reason I went with EBS was the had the cheapest rate at the time!

That's your own fault for not doing some homework before leaping into the largest financial transaction you'll probably ever make. Surely you take responsibility for your own actions or lack of them?

D3PO

murphaph wrote: »

That's your own fault for not doing some homework before leaping into the largest financial transaction you'll probably ever make. Surely you take responsibility for your own actions or lack of them?

jesus no need to rub it in the guys face. He made an error hes not the only one but at least hes still paying his mortgage. Theres a few hundred thousand that could take a leaf out of his book tbf.

tigershould

EBS never told me about trackers when I got my mortgage from them but fortunately since I was on a variable I was able to request moving to a tracker about 3 years into the term.

Best move I ever made.

TBH, all I knew at the time was that it was a lower rate than the variable. There was always a risk that the ECB rate could have gone through the roof.

benny79

Of course I done my homework I checked around for the cheapest rate for fixed and variable and who would give me the most etc but no one was jumping out saying take a tracker at the time or explaining what it was? I didnt even know what it was...(just like the ad!)

before you get a mortgage your going to these people for advise banks EBS etc.. and I was been told we can offer you X amount at such a rate! The only advise I was giving is fix it for first year which I didnt!

Plus I was getting a mortgage on my own. so my options where limited in how much I could get afford to pay back and the prices of houses..

ronan45

One thing i never got were the statements like the following.

"A tracker is saving you XXXX over the life of the mortgage"

"Indeed, Michael Dowling of the IMAF, outlined just how valuable they were recently when he pointed out that a 25 year tracker mortgage of €250,000 would require a mortgage write-down of €97,462 to make it worth while giving it up for a standard variable rate"

But when the ECB goes back up to more "normal" rates then surely the value of the tracker will be killed off also. So in effect the tracker was only worth 97K while the interest rates were at this all time low.
in 5-10 years if the ECB rates went up to somewhere between 4-7% would a tracker not be worth a lot less? Am i right in saying that just because the ECB rates are low at the moment doesnt mean they will ALLWAYS be loss making for the bank. Am i right in saying that at some stage next 10 to 15 years these trackers will actually make the bank some return?

wirelessdude01

benny79 wrote: »

Of course I done my homework I checked around for the cheapest rate for fixed and variable and who would give me the most etc but no one was jumping out saying take a tracker at the time or explaining what it was? I didnt even know what it was...(just like the ad!)

Well why didn't you go and find out then? Pleading ignorance after the fact is not an option. Why do you think that ad was run in the first place? Do get people to empower themselves with knowledge and information. Seriously.

stevedublin

wirelessdude01 wrote: »

Well why didn't you go and find out then? Pleading ignorance after the fact is not an option. Why do you think that ad was run in the first place? Do get people to empower themselves with knowledge and information. Seriously.

Taking the tracker was effectively betting on low interest rates, how did people know for sure that interest rates were going to be low for so long?

wirelessdude01

stevedublin wrote: »

Taking the tracker was effectively betting on low interest rates, how did people know for sure that interest rates were going to be low for so long?

Tracker rate will I feel always be lower than the SVR anyway.

tigershould

It's really not in the interest (no pun intended) of the banks to advise what is the best deal for a mortgage applicant. They're job is to make as much money out of customers as possible.

Edit: and to do this while exposing themselves to the least risk possible

wirelessdude01

tigershould wrote: »

It's really not in the interest (no pun intended) of the banks to advise what is the best deal for a mortgage applicant.

Up to the customer to empower themselves with knowledge. Pleading ignorance after the fact is silly.

ChRoMe

stevedublin wrote: »

Taking the tracker was effectively betting on low interest rates, how did people know for sure that interest rates were going to be low for so long?

They didn't and its not so much betting that they will be low, its linking the mortgage to the more macro state of the economy rather than to the individual bank.

murphaph

benny79 wrote: »

Of course I done my homework I checked around for the cheapest rate for fixed and variable and who would give me the most etc but no one was jumping out saying take a tracker at the time or explaining what it was? I didnt even know what it was...(just like the ad!)

before you get a mortgage your going to these people for advise banks EBS etc.. and I was been told we can offer you X amount at such a rate! The only advise I was giving is fix it for first year which I didnt!

Plus I was getting a mortgage on my own. so my options where limited in how much I could get afford to pay back and the prices of houses..

To be fair benny you wouldn't ask a car salesman for advice about what car to buy, so why would you trust a bank to give you sound financial advice about what mortgage to take out (with them!)? Anyway, best of luck with your situation. I wasn't trying to be nasty towards you. I realise there's a person behind the username.

murphaph

stevedublin wrote: »

Taking the tracker was effectively betting on low interest rates, how did people know for sure that interest rates were going to be low for so long?

Not exactly, taking a tracker was betting on interest rates not increasing beyond whatever fixed rate was on offer at the time and given Irish lenders only offer fixed rates for relatively short periods (in Germany you can fix for 20 years and have a known mortgage payment for the entirety of the time you have the loan!) then it's not such a risky bet at all really.

I still can't believe how many people took a discount for 12 months on a SVR over the longer term better value of a tracker. A tracker (at the margins offered in Ireland) could never have cost more than any SVR offering, which people were still taking up when trackers had already become available.

Trackers still exist here in Germany by the way, but the margins are more realistic and they track the EURIBOR, NOT the ECB rate!

stevedublin

ChRoMe wrote: »

its linking the mortgage to the more macro state of the economy rather than to the individual bank.

betting on the macro state of the economy rather than the individual bank then.

ChRoMe

stevedublin wrote: »

betting on the macro state of the economy rather than the individual bank then.

Which is what I just said.....

benny79

A car sales man tells you what he has on offer! so if he has a top of the range motor out the back and doesnt tell you about it , how you meant to buy it??

And when your buying things the sales person normally explains whats on offer pro's and con's of each and some maybe push 1 onto but at the end of the day its your choose but least you know everything on sale!

I was only told variable or fixed.

but see your point..

wirelessdude01

benny79 wrote: »

I was only told variable or fixed.

But by your own admission you said you had seen the ad about people saying they didn't know what a tracker mortgage was. Did it never cross your mind to find out or do you always trust what others tell you?

pwurple

ronan45 wrote: »

One thing i never got were the statements like the following.

"A tracker is saving you XXXX over the life of the mortgage"

"Indeed, Michael Dowling of the IMAF, outlined just how valuable they were recently when he pointed out that a 25 year tracker mortgage of €250,000 would require a mortgage write-down of €97,462 to make it worth while giving it up for a standard variable rate"

But when the ECB goes back up to more "normal" rates then surely the value of the tracker will be killed off also. So in effect the tracker was only worth 97K while the interest rates were at this all time low.
in 5-10 years if the ECB rates went up to somewhere between 4-7% would a tracker not be worth a lot less? Am i right in saying that just because the ECB rates are low at the moment doesnt mean they will ALLWAYS be loss making for the bank. Am i right in saying that at some stage next 10 to 15 years these trackers will actually make the bank some return?

Most trackers were taken out in the 2000-2006 period. In 10 to 15 years time (~2028), a lot of them will be paid off, or nearing the very end of the term. Compound interest is front-loaded... you pay most of the interest in the first portion of the loan. Towards the end of the term, it's mostly capital, so any interest rate hikes won't make much difference to the amount owed. Return for the banks at that stage will be minimal.

benny79

Mortgage advisers are called advisers for a reason!

It was 8 years ago I could of seen the AD after I had my mortgage besides was nt the point I was making!

Does nt matter now anyway I cant change it