Are lenders more likely to give discounts on trackers if the ECB raises interest rates?

M

mloc

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With talk of the ECB starting to increase rates in the near future, will this:
Increase the possibility of lenders doing early payment deals with customer to offload tracker mortgages from their books?
Decrease the possibility?
Have no impact on their decision?

I have a tracker mortgage of €190k at .5% above ECB with Danske/Pepper. I have the ability to pay this off earlier in small amounts, say an additional €4k/€5k per year over existing payments.
Based on what I have read here, I am holding off doing this if there is a possibility it would impede me from getting an early payment deal from the lender at some point in the future. If I thought an increase in ECB rates is making that a remoter possibility, I may start making the payments.
 
No chance IMHO ...if Danske were going to cut deals they'd have done so long before now. On the bright side .5% is a fantastic rate and IMHO it might yet be some time before the ECB starts to raise rates.
 
I think any increase in base ECB would reduce rather than increase the pressure on the bank, if there is any, to offer you a settlement.

Have you considered putting the money you have available into a pension. With money borrowed at such a cheap rate it seems a pity not to put it to work.
 
If you have a "spare" €5k a year, I'd put it in a pension. Assuming you are on the 40% tax rate (which most people with a "spare" €5k will be) then you'll get €2k back in tax (80 years tracker interest) plus the €5k goes to work for you and will probably earn a lot more more than the tracker would cost you over the long term. With money borrowed at that low rate, it's a no brainer.
 
Thanks for the feedback. I am already at my 25% max personal contribution into my company pension so that option is exhausted.
The spare cash is intermittent and that is why I thought putting it off the mortgage would be a good way of stopping it from being absorbed into my bottomless household budget.
Brendan had mentioned in a few threads the idea of holding off on paying down a tracker in case the various lenders ever come looking to cut an early payment deal.
 
Just hold off - when\if ECB rates start going up to 4% then you might pay off some of the mortgage with a lump sum you will have built up. Plus, its always better to have some cash for unforeseen things.
 
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