Mortgage rate

masterboy123 · 25-01-2019 7:16pm #1

I got a good offer of 2.6% fixed rate for 4 year, from Ulster bank. But it says after 4 years, a 4.3% SVR (standard variable rate) applies, which seems to be very high. I wonder if anyone has experience whether SVR is an approximate rate based on current market?
And is there usually a fee if I move to another bank after 4 years?

This mortgage game is getting tough day by day!

Thanks and have a good weekend

joebloggs32 · 25-01-2019 7:20pm

masterboy123 wrote: »

I got a good offer of 2.6% fixed rate for 4 year, from Ulster bank. But it says after 4 years, a 4.3% SVR (standard variable rate) applies, which seems to be very high. I wonder if anyone has experience whether SVR is an approximate rate based on current market?
And is there usually a fee if I move to another bank after 4 years?

This mortgage game is getting tough day by day!

Thanks and have a good weekend

That SVR is what currently applies. It may rise or fall between now and then. When your fixed rate is up you will be able to fix again but rates may be different in 4 years time. The ECB rate will most likely be higher by then so assume it will be.

Interested Observer · 25-01-2019 11:18pm

masterboy123 wrote: »

I got a good offer of 2.6% fixed rate for 4 year, from Ulster bank. But it says after 4 years, a 4.3% SVR (standard variable rate) applies, which seems to be very high. I wonder if anyone has experience whether SVR is an approximate rate based on current market?
And is there usually a fee if I move to another bank after 4 years?

This mortgage game is getting tough day by day!

Thanks and have a good weekend

It does cost to change mortgage provider, you need to get your solicitor involved again so there are legal fees.

But after the 4 years you can just fix again. You're not stuck on the variable rate.

masterboy123 · 26-01-2019 1:24am

Thank you.

Will it cost again 1500 euros to pay to solicitor if there is a need to change mortgage provider.

And if the last 10 years, has mortgage rate ever been so high that it reached 4.5%??

Interested Observer wrote: »

It does cost to change mortgage provider, you need to get your solicitor involved again so there are legal fees.

But after the 4 years you can just fix again. You're not stuck on the variable rate.

Interested Observer · 26-01-2019 8:56am

masterboy123 wrote: »

Thank you.

Will it cost again 1500 euros to pay to solicitor if there is a need to change mortgage provider.

And if the last 10 years, has mortgage rate ever been so high that it reached 4.5%??

Yeah it might cost that.

I will just reiterate that after the 4 years you can just take whatever fixed rate UB are offering at that time, which will be much lower than 4.5%

masterboy123 · 26-01-2019 9:57am

Well, it says SVR will be 4.2% (which looks high for me) after 4 years fixed period. It also says it will not be same as ECB.

However, AIB is giving 2.9% variable rate.

Which deal is better overall?

Interested Observer wrote: »

Yeah it might cost that.

I will just reiterate that after the 4 years you can just take whatever fixed rate UB are offering at that time, which will be much lower than 4.5%

What Username Guidelines · 26-01-2019 10:08am

masterboy123 wrote: »

Well, it says SVR will be 4.2% (which looks high for me) after 4 years fixed period. It also says it will not be same as ECB.

However, AIB is giving 2.9% variable rate.

Which deal is better overall?

You’re better off completely ignoring the variable, it could be anything in 4 years time. In my opinion the 2.6 fixed is better, as the AIB 2.9 could also change at any stage. Fixing usually gives peace of mind and in 4 years time you can shop for the best deal then.

Switching will cost money, but often the cost can be absorbed in potential saving, and/or banks offer incentives. In my situation I moved from a 4.3 to 2.95var and saved 250 a month. And the mortgage isn’t even that big. At the time, they were giving €2,000 cash back, and my solicitors fees were just under €1,200.

Obviously you cannot predict the incentives either, but people often shy away from shopping around and switching, due to the potential cost. It’s a bit of a pain to do with statements, etc, but certainly worth it.

Interested Observer · 26-01-2019 10:32am

masterboy123 wrote: »

Well, it says SVR will be 4.2% (which looks high for me) after 4 years fixed period. It also says it will not be same as ECB.

However, AIB is giving 2.9% variable rate.

Which deal is better overall?

Please, you're not acknowledging what people are telling you. You don't ever have to go on the variable rate. If you are on a variable rate at any stage you can just fix.

cloneslad · 26-01-2019 10:35am

I have no idea how much your mortgage is, but with a sample 300k mortgage for 25 years you would be looking at the following:

2.9%

€1,407 per month
€122,123.84 in interest payments

2.6%

€1,361.01 per month
€108,302.56 in interest payments

You’d have approx €50 per month in your pocket and you’d pay approx €14k less in interest.

2.6% with the added monthly payment (using the saving of €50 you’re making from not paying 2.9%)

€1,411.01 per month
€102,518.02 in interest payments
Mortgage life = 23 years 10 months

So you’d save approx €20,000 on this rate compared to the 2.9% and you would knock 1 year and 2 months off the mortgage. (Ulster bank allow overpayment of 10% of the remaining mortgage balance).

Now, what you must take into consideration of the above.

You can only guarantee the fixed rate for 4 years but I’m making this based on the only figures we know that you can get right now.

You must also factor in that the 2.9% rate could increase tomorrow and that if the variable rates available after the four years of payments will probably be standard enough across the board / ulster bank will have similar level fixed rates for you to move into.

Ulster bank also have a 2.3% fixed for 2 years, I think it’s for LTV less than 80%, which it would be on the figures above.

Finally, BOI sent me my fixed rate renewal last week at their standard 3% with 4.5% variable (or similar) and when I told them Ulster Bank offered me 2.6% they offered 2.8% and a 3.5% variable while I made up my mind.

ted1 · 26-01-2019 5:31pm

Don’t look at their interest rate. Look at their APR. Eg. EBS advertising the lowest rate. But their APR was higher than others with a higher interest rate.

26-01-2019 5:34pm

Interested Observer wrote: »

Yeah it might cost that.

I will just reiterate that after the 4 years you can just take whatever fixed rate UB are offering at that time, which will be much lower than 4.5%

How can you predict fixed rates 4 years in advance?

masterboy123 · 26-01-2019 10:59pm

This is clear now, thank you so much!

Will go for Ulster Bank so.

cloneslad wrote: »

I have no idea how much your mortgage is, but with a sample 300k mortgage for 25 years you would be looking at the following:

2.9%

€1,407 per month
€122,123.84 in interest payments

2.6%

€1,361.01 per month
€108,302.56 in interest payments

You’d have approx €50 per month in your pocket and you’d pay approx €14k less in interest.

2.6% with the added monthly payment (using the saving of €50 you’re making from not paying 2.9%)

€1,411.01 per month
€102,518.02 in interest payments
Mortgage life = 23 years 10 months

So you’d save approx €20,000 on this rate compared to the 2.9% and you would knock 1 year and 2 months off the mortgage. (Ulster bank allow overpayment of 10% of the remaining mortgage balance).

Now, what you must take into consideration of the above.

You can only guarantee the fixed rate for 4 years but I’m making this based on the only figures we know that you can get right now.

You must also factor in that the 2.9% rate could increase tomorrow and that if the variable rates available after the four years of payments will probably be standard enough across the board / ulster bank will have similar level fixed rates for you to move into.

Ulster bank also have a 2.3% fixed for 2 years, I think it’s for LTV less than 80%, which it would be on the figures above.

Finally, BOI sent me my fixed rate renewal last week at their standard 3% with 4.5% variable (or similar) and when I told them Ulster Bank offered me 2.6% they offered 2.8% and a 3.5% variable while I made up my mind.

Sleeper12 · 26-01-2019 11:03pm

Will they fix for a longer period? I'd fix f as long as possible. EU base rate is at its lowest ever. 0% if memory serves so it can't go any lower.

masterboy123 · 27-01-2019 1:11am

Yea getting fixed at 4 years.

PTSB giving 5 years fixed but need to open a current account with them.

Sleeper12 wrote: »

Will they fix for a longer period? I'd fix f as long as possible. EU base rate is at its lowest ever. 0% if memory serves so it can't go any lower.

Sleeper12 · 27-01-2019 1:25am

masterboy123 wrote:

PTSB giving 5 years fixed but need to open a current account with them.

I'm mortgage free now but if I wasn't I'd be fixing for as long as possible. Even four years is a help though. The first four or five years are the toughest on the average mortgage. For most people things get easier after that. Wages increase slightly & inflation means that you pay less in real terms year after year.

ted1 · 27-01-2019 2:21am

Sleeper12 wrote: »

Will they fix for a longer period? I'd fix f as long as possible. EU base rate is at its lowest ever. 0% if memory serves so it can't go any lower.

Base rate is low but Irish banks are still way higher than European banks. My friend just fixed for 20 years in France with a rate of 1.3%

In five years time we “should “ be more integrated and get European rated.

Q&A · 27-01-2019 7:41am

ted1 wrote: »

Base rate is low but Irish banks are still way higher than European banks. My friend just fixed for 20 years in France with a rate of 1.3%

In five years time we “should “ be more integrated and get European rated.

Rates are higher in Ireland partly because lending for home purchases is comparatively more risky here than other parts of Europe. A foreign bank wanting to lend here would face the same risk and would in turn look for higher return i.e., mortgage rates are higher in Ireland than in France because on average Irish mortgages are likely to default more than those in France.

Over time we might become less risky but that is a slow moving process which will require years of people repaying their mortgages.

stefanovich · 27-01-2019 8:02am

Be very careful about remortgaging. It's an amortised loan where you pay interest up front. If you refinance you will reset this amortisation schedule, increasing the amount of upfront interest the bank receives and reducing what you pay off the principal. Your monthly payments may be lower but you will be likely increasing the amount of total interest you pay and lengthening the time it will take to pay off the principal, which means if you sell you have less equity in the house.

Sometimes it is better to save and make a large overpayment to reduce monthly payments.

https://dash2retire.com/2018/01/16/home-mortgage-the-great-american-rip-off/

27-01-2019 8:48am

Anyone remortgaging at a lower rate should consider maintaining or even increasing the monthly payment & never increasing the term.

I went from a high variable rate to a decent enough fixed rate with a 50% (+actually) agreed overpayment.

Bob24 · 27-01-2019 10:21am

Q&A wrote: »

Rates are higher in Ireland partly because lending for home purchases is comparatively more risky here than other parts of Europe. A foreign bank wanting to lend here would face the same risk and would in turn look for higher return i.e., mortgage rates are higher in Ireland than in France because on average Irish mortgages are likely to default more than those in France.

Over time we might become less risky but that is a slow moving process which will require years of people repaying their mortgages.

Indeed, our high defaulting rate, low repossession rate, and the persistence of tracker mortgages all mean Irish banks have to make more money with interests in new loans.

The door of foreign banks is not completely closed though. I actually asked a French bank when I needed a mortgage to buy in ireland, and the banker was not against the idea. The only thing is he wanted a collateral in France to cover the mortgage amount (which means the French bank would cover itself with an asset in France and avoid the Irish risk of not being able to repossess which you mention), which I unfortunately didn’t have. So while that bank wouldn’t accept the Irish property someone is buying as a safe collateral, if there is something else to offer to them instead as a collateral they would be happy to offer a mortgage with French terms knowing the money will be used to purchase that Irish property.

Sleeper12 · 27-01-2019 10:24am

ted1 wrote: »

Base rate is low but Irish banks are still way higher than European banks. My friend just fixed for 20 years in France with a rate of 1.3%

In five years time we “should “ be more integrated and get European rated.

I agree & it's terrible but Irish banks have lost money on trackers for 10 years now. They now have to compensate homeowners that they shafted over the tracker. Customers not on trackers are paying extra to make up for the money lost on trackers. This isn't going away anytime soon. It's highly unlikely that Irish banks will lower rates any further

Bob24 · 27-01-2019 10:56am

Sleeper12 wrote: »

I agree & it's terrible but Irish banks have lost money on trackers for 10 years now. They now have to compensate homeowners that they shafted over the tracker. Customers not on trackers are paying extra to make up for the money lost on trackers. This isn't going away anytime soon. It's highly unlikely that Irish banks will lower rates any further

It’s not just trackers. High defaulting rates and very limited repossession options compared other European countries are increasing the cost of a mortgage business a lot, and at the end of the day that cost is passed to borrowers with higher rates.

Irish_peppa · 27-01-2019 11:13am

Interested Observer wrote: »

I will just reiterate that after the 4 years you can just take whatever fixed rate UB are offering at that time, which will be much lower than 4.5%

You think Mortgage Rates will go down? But isnt the ECB signalling rates will start going up from summer 2020 They have been signalling it for a long time now.

The ECB last raised interest rates in 2011, then cut them to record lows in 2016 to fight deflation.

https://www.irishexaminer.com/breakingnews/business/ecb-interest-rate-hike-likely-delayed-to-mid-2020-896406.html

newirishman · 27-01-2019 11:19am

Sleeper12 wrote: »

I agree & it's terrible but Irish banks have lost money on trackers for 10 years now. They now have to compensate homeowners that they shafted over the tracker. Customers not on trackers are paying extra to make up for the money lost on trackers. This isn't going away anytime soon. It's highly unlikely that Irish banks will lower rates any further

No Irish bank is losing money on a performing tracker mortgage.

Sleeper12 · 27-01-2019 11:35am

newirishman wrote:

No Irish bank is losing money on a performing tracker mortgage.

Just in case you haven't seen the news for the last few years banks now have to compensate homeowners to the tune of billions because they ripped them off over trackers. There have been suicides because of people losing their homes when the banks illegally bullied homeowners from the tracker rate.

It is a fact that banks are losing on the whole tracker fiasco. They have publicly stated several years ago that they cannot lower the variable rate because trackers are costing them so much.

ted1 · 27-01-2019 11:58am

Sleeper12 wrote: »

They have publicly stated several years ago that they cannot lower the variable rate because trackers are costing them so much.

Do you believe them ?

newirishman · 27-01-2019 12:03pm

Sleeper12 wrote: »

Just in case you haven't seen the news for the last few years banks now have to compensate homeowners to the tune of billions because they ripped them off over trackers. There have been suicides because of people losing their homes when the banks illegally bullied homeowners from the tracker rate.

It is a fact that banks are losing on the whole tracker fiasco. They have publicly stated several years ago that they cannot lower the variable rate because trackers are costing them so much.

Any of you what wrote there does not change the fact the banks are not losing money on performing tracker mortgages. Are they making a lot of money? No. But the net interest margin is very much positive for the tracker book, even if it is small. The tracker fiasco does not overall change that significantly.
I recommend a read through the financial statements of the various banks.

Sleeper12 · 27-01-2019 12:24pm

ted1 wrote:

Do you believe them ?

The government does. I believe that the banks blamed the cost of trackers for high interest rates when they called to explain themselves to the Dail.

newirishman wrote:

Any of you what wrote there does not change the fact the banks are not losing money on performing tracker mortgages. Are they making a lot of money? No. But the net interest margin is very much positive for the tracker book, even if it is small. The tracker fiasco does not overall change that significantly. I recommend a read through the financial statements of the various banks.

What are you arguing about??

It's you that stuck in the term "preforming" trackers. I never said that.

Is it possible for a preforming tracker not to make money? Maybe I'm wrong here but I would assume that the term preforming means that it's making money.

Can a loss making tracker be called a preforming tracker?

Maybe I'm wrong but to me preforming means profit making or at the very least non loss making?

newirishman · 27-01-2019 12:49pm

Sleeper12 wrote: »

The government does. I believe that the banks blamed the cost of trackers for high interest rates when they called to explain themselves to the Dail.

What are you arguing about??

It's you that stuck in the term "preforming" trackers. I never said that.

Is it possible for a preforming tracker not to make money? Maybe I'm wrong here but I would assume that the term preforming means that it's making money.

Can a loss making tracker be called a preforming tracker?

Maybe I'm wrong but to me preforming means profit making or at the very least non loss making?

You said the banks are losing money in the tracker mortgages. This is in fact not correct.
Performing essentially means that the money plus interest is being paid back and that there are no arrears. It doesn’t necessarily mean making a profit, for example if the banks financing costs are higher than what they can in return charge in interest. Which is currently not the case.

Sleeper12 · 27-01-2019 12:56pm

newirishman wrote:

You said the banks are losing money in the tracker mortgages. This is in fact not correct. Performing essentially means that the money plus interest is being paid back and that there are no arrears. It doesnâ€™t necessarily mean making a profit, for example if the banks financing costs are higher than what they can in return charge in interest. Which is currently not the case.

Banks are losing money hand over fist on their tracker mortgages. You then decided to Seperate the loss making ones from the profitable ones to argue with. I never Seperated loss making from profit making ones. It is a fact that banks are losing money on their overall tracker mortgages.

Just because they make a profit on some trackers doesn't mean that they are making an overall profit on trackers.

It is a fact that people on variable rates are paying more to compensate the banks for the billions that the tracker mortgages are costing. The banks have stated this to the government. This is fact

newirishman · 27-01-2019 1:21pm

Sleeper12 wrote: »

Banks are losing money hand over fist on their tracker mortgages. You then decided to Seperate the loss making ones from the profitable ones to argue with. I never Seperated loss making from profit making ones. It is a fact that banks are losing money on their overall tracker mortgages.

Just because they make a profit on some trackers doesn't mean that they are making an overall profit on trackers.

It is a fact that people on variable rates are paying more to compensate the banks for the billions that the tracker mortgages are costing. The banks have stated this to the government. This is fact

As I have been trying to explain to you, this is not correct. Banks are not losing money “hand over fist” on their tracker book. Margins are low but not loss making.
Fact is what you can read in the banks financial statements. You should have a read.

You won’t get an argument from me that the current mortgage rate offerings are very high compared to what you can find in other European countries.

You will also find that many people don’t care or even know how high their interest rate is, given the very low number of switcher mortgages, or the apparently very successful “cash-back” offers.
So why would a bank lower the rate if the market pressure is not there?

Mortgage rate

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