Mortgage breakage fee continually rising

RainInSummer · 08-03-2022 6:31am #1

Hi,

I'm looking at either moving my mortgage to a lower rate with my current provider or moving to another to avail of the lower rates on offer at the moment.

As such I've had a few conversations with the same rep from my current bank.

In mid Feb I was quoted €70 for a breakage fee, a week later in an email that rose to €275, then a week after that I was quoted €425.

There's approx 15 months left on my current fixed rate agreement.

First quote was on the phone, second and third were emails. I emailed and queried this situation and got a phone call back saying that breakage rates seemed to be changing on a daily basis. Several hundred percent though?

Anyone got any insight into what might be happening here?

Cheers!

Browney7 · 08-03-2022 8:26am

In short, Euro Swap Rates. Before the Ukraine kicked off, the bank's funding rate was very likely to have been increasing so the gap between the fixed rate they were charging you and the rate they'd have to pay to borrow money was quite low. The past few weeks with Ukraine, the Euro swap rates have dropped again. On Feb 12, the two year euro swap rate was 0.22%. it is now near zero. The one year swap rate has shown some changes but not as significant.

The breakage fee is a calculation based on your outstanding balance and not a "set fee". If you'd 200k outstanding and the fee was 0.2%, that would be 400 euro for example.

3DataModem · 08-03-2022 8:27am

Simple reason; their forecast of future interest rates is changing. Strangely, an increasing breakage fee suggests they expect interest rates to drop (i.e. they will lose more money charging you less than prevailing, so charge you more to get out of it).

AngryLips · 08-03-2022 9:49am

Who is your mortgage provider with? Am just waiting for confirmation of breakage fee myself

RainInSummer · 08-03-2022 9:51am

https://www.boards.ie/discussion/comment/118749340#Comment_118749340

EBS.

RainInSummer · 08-03-2022 9:52am

Thanks @Browney7, great explanation.

RainInSummer · 08-03-2022 9:52am

Thanks @3DataModem it makes sense alright.

Mortgage breakage fee continually rising

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