What is the threshold on tracker mortgages?

BRM

I have a tracker mortgage and I’ve been getting letters from my bank the past couple of months showing a gradual reduction from 4 down to 3.5%. I’m now getting the same letter without the percentage just the total sum less TRS.

The most recent letter dated last week shows a higher total due than the previous letter stating 3.5% from Jan 2009.

I always understood there was a 0.25 - 0.5% difference from the ECB and the tracker mortgage but in my case this seems to be 1.5%+ over the current 2% ECB – what are the % thresholds on the ECB with tracker mortgages?

I know the banks are quick to pass on any interest rate hike but in this case it seems they are blatantly saying the rate decrease is not being passed on?

Ogham

Your mortgage contract should state the margin that your mortgage will be above the ECB rate. The margin is not the same for every lender or even every borrower at the same lender. Whatever your agreed margin is (say ecb plus 1.5%) - then they have to stick with that difference - that is why it is a" tracker".

The latest ecb cut was 0.5% from 2.5% to 3% - some lenders haven't yet passd this on - they have 30 days to do so.
The higher repayment maight be to do with the tax relief going down because the interest amount has gone down. Ring them and ask for a breakdown of the figures.

BRM

Ogham wrote: »

The latest ecb cut was 0.5% from 2.5% to 3% - QUOTE]


Should that not be 2.5 to 2%?

I never got any new contract about this threshold, we changed about 3 years ago to a tracker after about 2 years into the standard variable rate.

Ogham

BRM wrote: »

Ogham wrote: »

The latest ecb cut was 0.5% from 2.5% to 3% - QUOTE]


Should that not be 2.5 to 2%?

I never got any new contract about this threshold, we changed about 3 years ago to a tracker after about 2 years into the standard variable rate.

Yes - 2% - I hit the wrong key..

You should have something in writing about the tracker rate. Get a copy from the lender.

Sleipnir

Some lenders do have some small print that if the base rate goes below a certain level, they don't have to pass on further reductions below that.

dotsman

Sleipnir wrote: »

Some lenders do have some small print that if the base rate goes below a certain level, they don't have to pass on further reductions below that.

First I heard of it! I'd seriously doubt it.

OP, with regards your tracker, you will definitely have received documentation when you switched to the tracker outlining what percentage you are tracking the ECB rate at. It would typically look like ECB + X.X%. If you look at your statements (or look it up online if you have online banking), it will usually reference it there.

There are no defined thresholds for trackers. It was whatever you and you bank agreed at the time (at any 1 time, a bank would have typically been offering several different tracker rates depending on LTV, Owner-Occupier status and amount being borrowed. These rates also differed greatly over the years).

Ogham is right in that some banks are showing their true colours now by being very slow to pass on the rate cuts. Other banks have been very efficient.

rameire

dotsman wrote: »

First I heard of it! I'd seriously doubt it.

OP, with regards your tracker, you will definitely have received documentation when you switched to the tracker outlining what percentage you are tracking the ECB rate at. It would typically look like ECB + X.X%. If you look at your statements (or look it up online if you have online banking), it will usually reference it there.

There are no defined thresholds for trackers. It was whatever you and you bank agreed at the time (at any 1 time, a bank would have typically been offering several different tracker rates depending on LTV, Owner-Occupier status and amount being borrowed. These rates also differed greatly over the years).

Ogham is right in that some banks are showing their true colours now by being very slow to pass on the rate cuts. Other banks have been very efficient.

they are as efficient as their ts and cs state the have to be,
as regards the opt out, it is out there but is not common in ireland is more common in the uk.