Should I ask for an offer for my Irish tracker mortgage?

Question

I currently have a tracker mortgage and have heard that mortgage providers are offering good incentives to move to a different type of mortgage. My questions are,

• Should I go to my provider and request an offer?
• If I am to request an offer, what is the best I can expect?

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As is pointed out below, there is nothing to be lost by asking. What might be a better question is, What is the best deal I can get returning a tracker to my provider?

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Trackers were wonderful when they were being given out. I think I am on .75% + ECB which I’m very happy with. When I asked the question I was hoping to get a dialogue going about deals that people were being offered. I think at the time I was being offered €1,000 to move, but there was talk about not moving for less than 30%-40% of your mortgage. Has anyone had a good offer?

Answer 1

http://www.herald.ie/opinion/columnists/dan-white/dan-white-keep-a-hold-of-that-tracker-mortgage-it-could-save-you-euro100k-2163665.html

Well, I'm no expert but I'd keep hold of that tracker mortgage. The tracker 'tracks' the European Central Bank, ECB, interest rate. I assume you got your mortgage pre 2007 (the storm) when it was possible to get a tracker. The ECB rate was a lot higher in 2007 and you paid more in interest but as the rate has dropped now a tracker is in your favour. In fact the banks would love it if you changed to a fixed rate because there is a large saving to be made on a tracker mortgage because the amount of interest paid is decided on the rate set by the ECB which changes every so often unlike a fixed rate which is set by the banks in Dublin at a favourable rate to them. Over the course of the mortgage a variable 'tracker' would fluctuate between more expensive or cheaper but overall you should see a saving.

The article above is from the start of the summer but although I only scanned it I hope it says the same as my ramblings there.

Answer 2

Might I offer a contrarian point of view here?

Of course, your tracker interest rate is absurdly good at the moment (like 2.5%, right?). But, what goes down can come up, too. The article @rath3r links to claims a 100K savings, but the writer assumes that tracker interest rate will be 2.5% for the remainder of that 30 year loan.

Do you know for a fact the ECB rate will stay at 1% for the next 25-30 years? If you think so, then ask yourself: 5 years ago did you know that it would go down this far? Your bank certainly didn't.

I'd say run the numbers, and see what you can lock in on a fixed rate (it is a bad idea to switch to a variable, of course). If you can get an interest rate that's historically low, like the 4.19% mentioned in the article, I'd consider it. Especially if they also offer you other incentives, like cash incentives, and you used that to lower the mortgage amount or pay off other debt.

You could even see if you can squeeze your bank a bit, and negotiate something absurdly low like 3%, or maybe better incentives. At the moment, you're in a position of power where negotiations are concerned!

So yes, you would be paying more per month now, but getting a fixed rate would also protect you in the future. Compare what you can can get as new fixed rate now to what you were paying initially. The interest rate could go back to where you started. Also compare to what you could be paying if ECB rate went a good deal higher, like 6%, 7% or more. Remember, the current troubles are the first troubles the Euro's faced, so who knows what will happen? In the USA, in 1980 and twice in 1981, benchmark interest rates spiked to 20%. It was 10% or higher from January 1979 straight to July 1982. Could you survive even a few months of that?

For the record, I'm not from Ireland, and I had no idea tracker mortgages even existed until I saw your question.

Answer 3

No. Do not move off a tracker under any circumstances. You will regret it. Its the only investment in the banks portfolio where the client wins and not the bank.