Tracker mortgage payment increased when rate reduced!

Jimjay

Have a tracker mortgage with ptsb at 0.8% above base.
After each of the last two rate reductions our monthly payment went up.
When the base rate changes we get a letter stating the new monthly payments, then we get a second letter saying the interest relief has now been calculated and notifying us of the new amount which is more than the amount before the rate change.
We asked them on the phone to explain and they said it complicated and they cant explain but it is correct. Asked them to get someone to send us a letter explaining how the calculation was done. We got a letter saying thanks for our enquiry and we can assure you the calculation is correct.

Is this right?
Many thanks

Jimjay

Example
Monthly payment was €995
Rate went down
Letter arrived saying new monthly payment €984
Another letter arrived saying tax relief calculated for new rate, monthly payment €996

This has happened for at least the last two base rate reductions

Nervous Wreck

TRS is based on the amount of interest you pay. Tracker rate goes down, you pay less interest. You pay less interest, you get less relief.

Jimjay

Nervous Wreck wrote: »

TRS is based on the amount of interest you pay. Tracker rate goes down, you pay less interest. You pay less interest, you get less relief.

Sure but would the monthly payment still go up? We are better off with higher interest rate.

gordongekko

What year did you purchase your house?

Jimjay

gordongekko wrote: »

What year did you purchase your house?

Think it was 06 or 07.

Nervous Wreck

Jimjay wrote: »

Sure but would the monthly payment still go up? We are better off with higher interest rate.

Not necessarily but it can and, in your case, has. You're really not better off with a higher interest rate, it would work out (a euro) cheaper for you at the moment, but after 2017, TRS is gone and you'll be delighted for every drop in your tracker.

JTMan

The proposal is for TRS to go on 31 December 2017. I certainly think the government will need to start phasing out TRS from 2018 onwards rather than a big bang approach or we will see another arrears spike from the boom time buyers.

wench

They already are phasing it out, reducing the amount of interest that gets relief as time goes on.

http://www.revenue.ie/en/tax/it/reliefs/tax-relief-source-mortgage-rates.html

JTMan

wench wrote: »

They already are phasing it out, reducing the amount of interest that gets relief as time goes on.

http://www.revenue.ie/en/tax/it/reliefs/tax-relief-source-mortgage-rates.html

For some but not for all. A first time buyer who purchased in 2008 gets 30% relief, each year, until 31 December 2017. Then 0% in 2018 as things currently stand. TRS needs to be phased out starting in 2018 for the boom time buyers.

wench

The % relief stays at 30% for them, but the amount they get it on is going down.
Have a look at the ceiling column, they get relief on €10K this year, reducing to €3k next year.