Should I fix my tracker?

Sunrise_Sunset · 10-06-2022 8:13pm #1

I'm on a 2.1% tracker with PTSB. Approximately 203k left to pay over 20 years. Should I fix? 7 year fixed with PTSB is currently 3%.

I can't switch as I'm starting a new job next month and I think I'd have to be through a probation period etc.

With the ECB rate increasing next month and predicted to have further increases, this could go above 3% for me if I stay on my tracker.

Also worried that if I didn't fix now and waited to see what happens, the fixed rates could be increased too, and I'd be snookered.

tvjunki · 10-06-2022 8:40pm

You need to ask yourself if you fix will you roll back to a tracker rate afterwards? This increase could be only for a few years and the first increase is a.25%(extra 23euros ) the next .50%. This is going to be a gradual change. Do you expect your finances to decline or reduce over the next 7years or so? Do you expect an increase in wages?

I think as the documentation will show that you will roll to their standard variable rate which at the moment it is 3.95%.

I am not an expert but from my own experience I fixed when the ecb was at a record high 4.25% which brought my mortgage to 6.25%. In highsight I would have held out and save the last 10years would have saved a massive amount in interest. You do not have to go with my advice. I know the years of very low interest rates are gone for now but inflation is based on resources and at the moment they are scarce but we will see the turn around. If you can pay down a little bit more before the rates change that might help. Alot can happen in 7years.

Galwayguy35 · 10-06-2022 8:47pm

On a tracker myself at 1.1% with Bank of Ireland, even with the increases I reckon I will still be better off staying as I am rather than changing to a fixed rate

Sunrise_Sunset · 10-06-2022 8:59pm

https://www.boards.ie/discussion/comment/119185760#Comment_119185760

I would do the same if I had that rate.

macvin · 10-06-2022 11:58pm

2.1% tracker is of little value. Avant's standard variable rate is 2%.

I presume this is a mover tracker.

In your case (and taking into account you are moving jobs) the ptsb 3% is probably as good as you can get at the moment.

It's €88 a month higher. But just €64 higher than what you will be paying from 1st aug and just €15 higher than what you probably will be paying at end Nov

anewme · 11-06-2022 12:02am

All good things must come to an end. On ECB plus 0.5% one of the Danske Trackers since 2008 , think will stay put and see it out.

standardg60 · 11-06-2022 12:53am

If you can afford either option then i would stay put, as i am doing with my tracker.

Inflation now is being fuelled by shortage rather than credit, and interest rate rises will only further this as people tighten their belts. Hearing that retail is suffering already in my line of work, so predict any rises will be shortlived and not as drastic as forecast.

Gant21 · 11-06-2022 1:18am

Like the trampoline in a storm lock it down.

wotzgoingon · 11-06-2022 1:31am

https://www.boards.ie/discussion/comment/119186567#Comment_119186567

I don't quite understand your post you are saying you are on 0.5% tracker? I never even knew you could get one for that low.

anewme · 11-06-2022 1:47am

EcB plus 0.5% was a special if you were borrowing less than half the property value. One off offer from Danske.

Im obviously lamenting it’s demise, but at the same time , been the best financial decision I’ve ever made.

I don’t see the point in changing now, unless people think rates will explode.

Gant21 · 11-06-2022 1:52am

Rates are going to mushroom, expect 1.5% by end of year

Sunrise_Sunset · 11-06-2022 8:36am

Are fixed rates expected to increase too, once the ECB increases begin?

Sunrise_Sunset · 11-06-2022 8:38am

https://www.boards.ie/discussion/comment/119186556#Comment_119186556

Yes it's a mover tracker. I was on 1.1% up until 2019.

Sunrise_Sunset · 11-06-2022 8:47am

I do like to overpay on the mortgage though. My goal is to have the mortgage paid off in about 10 years. That is if all stays well with jobs and wages etc. I know I can still overpay on the fixed and it will sit on the account as credit until the end of the fixed term. There's also no guarantee that jobs and wages will remain healthy enough to be able to overpay, and other bills will be increasing drastically.

When I moved I borrowed a smaller amount on a fixed rate. I recently came out of that to a variable rate as I plan to have that paid off by March next year. They were offering zero break fee so I went for it. I figured in a few months time the zero break fee might not be on the table. Still happy enough with that decision, even though I went from 3% to 3.9%.

Had approval in principal from Avant a few weeks ago but then I really needed to change jobs so that took precedence.

Wheety · 13-06-2022 11:04am

https://www.boards.ie/discussion/comment/119187000#Comment_119187000

With rates going up it's more likely that, if you're currently on a fixed rate, the break fee will be zero.

macvin · 13-06-2022 11:49am

https://www.boards.ie/discussion/comment/119187000#Comment_119187000

Check with Avant if that makes a difference. If you can show strong employment history, it shouldn't make any difference.

Go for a 15 year fixed and if you have spare cash, increase pension contributions - you get a far better return from that in terms of tax saving than the 2.4% mortgage rate.

Anyone with spare cash should look at increasing pensions before paying down a mortgage. - unless you have decent pensions in place already

awec · 13-06-2022 12:13pm

https://www.boards.ie/discussion/comment/119186980#Comment_119186980

Yes.

But banks don't wait on ECB changes to change their rates. Rate changes will be driven by the expectation of ECB rate changes, not the actual changes. The rates available today will have the upcoming increases already priced in.

Avant recently bumped up their rates for example.

Sunrise_Sunset · 13-06-2022 5:58pm

https://www.boards.ie/discussion/comment/119195648#Comment_119195648

Thanks. I contacted PTSB today and they are sending out further information by post. The lady I spoke with seemed to think I was mad to consider it, and said the % increase for July hasn't been confirmed yet.

I still think it's a good option to consider. It may mean paying a bit more in short term, but ultimately less in the longer term, if predictions of an increase of up to 1.5% in the next 12-18 months are correct.

standardg60 · 13-06-2022 6:30pm

https://www.boards.ie/discussion/comment/119197593#Comment_119197593

That is one smart lady imo

Sunrise_Sunset · 13-06-2022 8:49pm

https://www.boards.ie/discussion/comment/119197733#Comment_119197733

Hmm, I'm not sure. Rates could go up by 1.5% which would take my current rate to 3.6%. This is more than speculation, I think it's quite likely. By fixing now, although I'd pay slightly more in short term, I'd save more in the long term.

standardg60 · 13-06-2022 9:07pm

Then fix, predictions are nothing more than opinions at the end the day.

I'm staying with my tracker as I think any rate rises will be short-lived, as I think a recession is on the way.

Car99 · 13-06-2022 9:11pm

If you're on a tracker of ECB rate plus 2% , are you at the moment paying 1.5% as the ECB is -0.5% ?

Sunrise_Sunset · 13-06-2022 9:20pm

https://www.boards.ie/discussion/comment/119198457#Comment_119198457

Rate is 2.1%. that's what's on all of my documents, but I get your point about it being currently in minus.

Geuze · 13-06-2022 10:01pm

https://www.boards.ie/discussion/comment/119198457#Comment_119198457

Typically trackers are priced off the ECB main refinancing rate, which is 0%.

macvin · 14-06-2022 11:45am

https://www.boards.ie/discussion/comment/119197593#Comment_119197593

The ECB has stated very clearly that interest rates will rise by 0.25% at their July meeting. It is effectively written in stone. They have also said that a further rate increase will be made in September and most likely a 3rd increase by end of year. The only question is if September will be 0.25% or 0.5%. But by ends of this year unless something catastrophic happens, ECB lending rate will be 0.75% - 1%. It probably won't go further than 2%, but could for a short period. Your 2.1% tracker will almost certainly be 2.85% by end of this year- or at end of sept.

https://www.boards.ie/discussion/comment/119197733#Comment_119197733

No she's not. She obviously doesn't understand that a 2.1% tracker is not a great rate - its good, but nothing special. Avant's standard variable rate best it. It jumps immediately the ECB raises the rate. - If the poster was still on the 1.1% tracker, then THAT would be valuable. Any tracker 1.25% or less should not be touched. But 2.1% is nothing special

https://www.boards.ie/discussion/comment/119198457#Comment_119198457

ECB deposit rate is -0.5%, the refinancing / loan rate is 0.0%. The refinancing rate is what is used for loans.

Cape Clear · 23-06-2022 4:39pm

https://www.boards.ie/discussion/comment/119200452#Comment_119200452

The Avant fixed rates have made most of the tracker rates look very plain or even high. An interesting and challenging 9 months to 2 years ahead given how Le Garde,Lane & Co have laid it out. Rising interest rates until inflation falls to 2%.

macvin · 24-06-2022 1:54pm

https://www.boards.ie/discussion/comment/119239951#Comment_119239951

That's not exactly how Lagarde spelt it out.

The stated aim is for 2% inflation and interest rates to be "neutral" to this. The market reads that as 1.5%-2% long term rates

There may be a short-lived period of rates going to 3% or a little higher. Reduced consumer demand is already showing signs of cooling inflation and a probable slowdown will extenuate that and at the same time ensure the ECB is very careful about raising too much. If russia's war on Ukraine has any type of peace talks, that will drive energy prices down and inflation with it.

Most trackers are 1.25% and lower. They are very good rates

Those on trackers of 1.25% and lower should stay on them (most likely 15 year+ have been paid off) Those on mover trackers where the rate is most likely 1% above your original tracker rate and therefore running at 1.95%-2.25% should look at fixing for as long as possible for a rate under 3%

Sunrise_Sunset · 24-06-2022 7:25pm

I looked back on some of my past letters from the bank. I'm missing a few but of the ones I have, my tracker rate went up to over 5%, in 2008 I think it was.

PTSB sent me out a letter outlining the following:

If we stay on 2.1% tracker the total interest repayable for the remaining term of the loan would be 45,687 (obviously this rate is going to change, but it could come back down again if there's a recession)

For the Green 5 year fixed rate at 2.8% the total interest repayable for the remaining term of the loan would be 78,547

For the 7 year fixed rate at 3% the total interest repayable for the remaining term of the loan would be 77,350

Should I fix my tracker?

Comments