You may find that banks may be trying to entice you away from your ‘Tracker Mortgage’ with subtle mail shots and fixed rate deals. Anyone on existing tracker rates as low as ECB plus .5% (will now be 3.75%) are costing the banks money as the current cost of funding far exceeds the amounts customers are paying.
Thankfully interest rates are falling with two recent ECB rate cuts of .5% each. ECB president Jean Claude Trichet has indicated that there could be further cuts before the end of this year and into next year. If this is the case then mortgage holders should stick with Tracker/ Variable deals in the short term.
Great deals in Ireland!
During October all the main mortgage lenders in the Irish marker that were still offering Tracker Mortgages withdrew them for new business. The variable rates that banks are now offering for new mortgage business are far in excess of the already agreed tracker deals that an estimated 100,000 mortgage customers have.
So Tracker Mortgage holders ‘BEWARE’. You are probably costing your bank money and they wont like that.
Better in Ireland!
The Financial Regulator has warned banks that ‘Any recommendation must be in the consumer’s best interests and they must recommend a mortgage that is more suitable for the individual consumer than the tracker mortgage. Lenders should fully disclose the short, medium and long-term effects of switching to each consumer’.
- Standard variable rate – when (ECB) rates rise, your lender can pass on the increase in whole or in part. Similarly, if ECB rates fall, your lender can pass on some or all of the reduction to you. You are NOT automatically entitled to benefit from rate decreases
- Tracker variable rate / tracker mortgages – this is set at a fixed percentage or 'margin' above the ECB rate. For example, it could be set at the ECB rate plus one percentage point. So, if the ECB rate falls by a half of a percentage point, then your mortgage will automatically follow.
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