# What were people saying about trackers in 2005?



## Brendan Burgess (3 Mar 2020)

In another thread, someone said that the advantages of trackers were not anticipated back in 2005. So I went through a few old posts to see what was actually been said.  There are links to threads such as "Is there a catch with trackers?" but those threads are no longer available.

It seemed assumed on askaboutmoney that trackers were the best, but that might also be because BoSI and Ulster Bank trackers were lower than the other banks.

Here someone is wondering whether trackers will still be available after the one year fixed rate





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						what would be the best mortgage option to go with.....
					

Hi, I am in the process of taking out a mortgage with PTSB. Just wondering is it good to go with 1 Yr fixed  and then move to Tracker.   OR  Tracker from the beginning.  FYI, mortgage over 250K.  Thanks in advance  Joel



					www.askaboutmoney.com
				






> I think I should go with 1 yr. fixed first & after 1 Yr. move to Tracker (whatever the rate at that time!). Is there a possiblity that there won't be tracker at all after 1 yr. In that case my decision of going with 1 yr. fixed rate might back fire... what do you think?



And this one reports that AIB were proactively calling people to switch them to trackers





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						Tracker vs variable rate mortgage
					

AIB are suggesting that I change over to a tracker mortgage from my current variable rate mortgage. My mortgage is now below a certain percentage of the house value and it looks like I could get a lower rate if I change.   Can someone explain the difference, together with pros and cons, between...



					www.askaboutmoney.com
				







> AIB are suggesting that I change over to a tracker mortgage from my current variable rate mortgage. My mortgage is now below a certain percentage of the house value and it looks like I could get a lower rate if I change.
> 
> Can someone explain the difference, together with pros and cons, between a tracker mortgage and standard variable rate mortage. I'm a bit suspicious of their reasons for suggesting a change; I find it hard to believe they are actually trying to save me money!!



And another poster:



> I am an AIB customer as well and I'm currently changing from the standard variable to their lower tracker rate. Speaking to a member staff in AIB today. They are calling all their variable rate mortgage holders and advising them to switch to the new tracker rate.



No catch involved.

And Clubman provided links to posts which are no longer available, but summarised them as follows



> In short a tracker is just a variable rate which guarantees the margin above the base _ECB_ rate which the lender will charge which means that changes in the base rate will be passed on immediately. Variable rate mortgages don't offer any guarantees on margin charged or when rate changes will be passed on. Basically all other things being equal (in particular assuming a competitive rate in the first place) a tracker rate is simple more transparent (in terms of margin charged) than a variable rate.



It's also interesting that people were suspicious of tracker mortgages? 





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						Is there a catch with Tracker Mortgages?
					

I currently have a variable mortgage with AIB 4.95% APR. Looking into changing to a Tracker. I would fall into the LTV range of 50-80% which is 4.58% APR.    Is there any reason why I should not change to a Tracker and why does everybody not get a Tracker in the first place?    Do I simply write...



					askaboutmoney.com
				






> I currently have a variable mortgage with AIB 4.95% APR. Looking into changing to a Tracker. I would fall into the LTV range of 50-80% which is 4.58% APR.
> 
> Is there any reason why I should not change to a Tracker and why does everybody not get a Tracker in the first place?


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## Ceist Beag (3 Mar 2020)

We switched to a tracker in 2005 and I very much remember us doing so on the back of advice provided on AAM and thinking that it was a no brainer. So I very much dispute that the advantages of trackers were not anticipated back in 2005. They were very much anticipated to anyone on here.


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## Brendan Burgess (3 Mar 2020)

I see here that Dinarius switched from EBS to AIB because EBS  told him that they did not do tracker mortgages. 





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						When did the EBS start offering tracker rates?
					

I just noticed in a newspaper's table of rates that EBS have a tracker rate.  Last summer I went to the EBS as an existing customer (of five years standing, with a mortgage on our apartment) to see about a getting a top up to buy a house, while keeping the apartment. We wanted to increase our...



					www.askaboutmoney.com


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## Brendan Burgess (3 Mar 2020)

Ceist Beag said:


> We switched to a tracker in 2005 and I very much remember us doing so on the back of advice provided on AAM and thinking that it was a no brainer. So I very much dispute that the advantages of trackers were not anticipated back in 2005. They were very much anticipated to anyone on here.



Hi Ceist Beag

That is very helpful and I found the record here:. You switched from AIB.  AIB did have trackers at the time, so it must have been for a cheaper tracker rate. 





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						Ulster Bank vs BOI??
					

got offers off both of the banks mentioned above.....i know that there would be various pros and cons for both of them but if you had to toss up between the two which in general have the best record for FTB's 100% tracker mortgage buyers???



					askaboutmoney.com


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## aristotle (3 Mar 2020)

I was on a AIB tracker in 2005 and moved to a then NIB (later became Danske Bank) Tracker in May 2007 to save another .4% on interest.

I remember some people saying whats the rush, there will be another better deal around the corner. Sometimes you have to take a good deal when you see it. Well, there was no better deal than the .5% margin offered by the then NIB.

Many others didnt know what a tracker mortgage was, like the famous ad


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## Brendan Burgess (3 Mar 2020)

It's very clear that some informed posters wanted only trackers. The advantages were such that they didn't need to spell them out.





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						Lower tracker rate from EBS
					

I came off a fixed rate with EBS a couple of days ago and rang them yesterday to see if I could bustle a better rate than their 3.25% SVR or their ECB+1.25% Tracker (same rate, of course) on the basis of telling them I'm arranging to move to the ECB+0.79% Tracker currently on offer from NIB.  I...



					www.askaboutmoney.com
				




Brendan


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## demoivre (3 Mar 2020)

Brendan Burgess said:


> And Clubman provided links to posts which are no longer available, but summarised them as follows
> 
> *In short a tracker is just a variable rate which guarantees the margin above the base ECB rate* which the lender will charge which means that changes in the base rate will be passed on immediately. Variable rate mortgages don't offer any guarantees on margin charged or when rate changes will be passed on. Basically all other things being equal (in particular assuming a competitive rate in the first place) a tracker rate is simple more transparent (in terms of margin charged) than a variable rate.



There, I always knew a tracker was just a special type of variable rate. Now if the FSPO agrees that could have implications for many of the appeals he is dealing with.


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## so-crates (3 Mar 2020)

I took out my mortgage in 2005 and I didn't even consider a variable or fixed and immediately opted for a tracker because I felt that it was taking the control away from the bank. The relationship is asymmetric, they set the terms, they apply the penalties and as a customer you have little control over the relationship. I felt it was better that the bank wasn't the sole arbiter of what I had to pay. In my mind, the advantage to the bank was that they could point the finger at someone else for rate rises but I liked that they were not the ones setting the rate, it tied them down as much as it tied me.


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## Dinarius (3 Mar 2020)

Brendan Burgess said:


> I see here that Dinarius switched from EBS to AIB because EBS  told him that they did not do tracker mortgages.
> 
> 
> 
> ...



We never managed to get a tracker. I can't quite remember why. But, I do know that AIB refused us.

However, we do have a buy-to-let at the normal mortgage rate, not the buy-to-let rate.

You win some, you lose some.

D.


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## ClubMan (3 Mar 2020)

demoivre said:


> There, I always knew a tracker was just a special type of variable rate. Now if the FSPO agrees that could have implications for many of the appeals he is dealing with.


It's hardly any surprise or mystery that a tracker is/was simply a form of variable rate albeit linked to the relevant underlying ECB rate and with a guaranteed margin as opposed to the rate charged being totally at the discretion of the lender who can change it at will either way at any time?

I'm not really sure why most or all standard variable rate mortgage contracts are not deemed unfair to the consumer since they give the lender total and absolute discretion as to what they can charge and when they can alter it - e.g. wholesale rates could fall and they lender could legitimately *increase* their rates under such contracts.


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## B26354 (3 Mar 2020)

At the beginning of 2008 EBS confirmed themselves why trackers were a better option than SVR and why they were offering them to customers instead of SVR’s. 9 months after Dara Deering said this EBS pulled trackers off the market.


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## B26354 (3 Mar 2020)

Here is what EBS said about their new tracker rate in 2004. Notice they were priced at same rate as the SVR.









						EBS announces lowest variable rate in market
					

EBS has undercut rival lenders to announce the lowest standard variable mortgage rate in the Irish market




					www.irishtimes.com


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## Protocol (3 Mar 2020)

I got a tracker from NIB in 2005, at 0.79% margin.

I'm sure that I knew the benefits of trackers.

Indeed, I recall explaining them at work.

I then moved to NIB's LTV tracker at 0.5% margin.

I recall saying to the bank official - "you will make less from me".

He replied: "but we will attract other customers"


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## aristotle (3 Mar 2020)

That reminds me of what the NIB person said to me when I said how good a rate it was. He expected to sell more personal loans, credit cards and more investment products. 

It sounded like the tracker was way of just acquiring customers for all their other bank products.


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## Brendan Burgess (3 Mar 2020)

I suppose that the decision was fairly easy if it was between a tracker at 5% and an SVR at 5%. You were getting the guaranteed margin free of charge.

The problem was for those people who were worried about rates rising and fixed at 5.5% instead of opting for a tracker at 6%. 

It would be interesting to see a discussion of "fixed vs. tracker" from that period. 

While I think that most people on askaboutmoney appreciated the value of having a guaranteed margin, we did not realise just how valuable trackers would become. We could not have anticipated that Ireland would end up with the highest mortgage rates in the eurozone.


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## Brendan Burgess (3 Mar 2020)

B26354 said:


> Here is what EBS said about their new tracker rate in 2004. Notice they were priced at same rate as the SVR.



I remember speaking from the floor at an EBS AGM. 

I was a huge supporter of mutuality. And I had always recommended EBS as the lender which would probably be the cheapest over the longer term. 

But I said that I could no longer recommend them as Bank of Scotland was much lower.  They replied "You must look at value over the longer term" 

I told them that the BoSI rate was a tracker, so it was probably always going to beat the EBS. 

Brendan


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## B26354 (3 Mar 2020)

I’m assuming your comments were made prior to EBS then introducing a tracker rate to compete with BoSI?
The timeline of comments by EBS management have always intrigued me:
2004-Mcgoverns comments that EBS were introducing a tracker product 
2008-Dara Deering stating that SVR’s were a rip off and trackers were better value 
2016-Alan Merriman stated EBS didn’t offer many trackers and pushed a fixed rate & SVR. 

So I don’t know where all their tracker customers went to.

 Also interesting to hear what banks were saying about trackers between 04-08 and how they have changed their tune more recently. Sounds like history being re-written.


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## Brendan Burgess (3 Mar 2020)

B26354 said:


> Sounds like history being re-written.



That is what I am trying to do in this thread. Document what was actually said. 

Brendan


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## Sunny (3 Mar 2020)

Brendan Burgess said:


> It would be interesting to see a discussion of "fixed vs. tracker" from that period.



I think this is the key point. There was very little fixed mortgage market for a few years when rates were low but there was no doubt that in 07/08, mortgage rates were climbing. People forget we were at an ECB rate of 4.25% in 2008. If there fixed rates of 5% at the time, I would imagine a lot of people gave up trackers and without hindsight, would have been an interesting discussion at the time. My own memories is that seemed to be strong consensus that trackers should not be given up.


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## Brendan Burgess (3 Mar 2020)

Sunny said:


> . My own memories is that seemed to be strong consensus that trackers should not be given up.




That is mine too. But I would like to find a discussion of it on Askaboutmoney. 

I do seem to remember some people who had fixed gloating about it a year or two into the fixed period, on the grounds that the variable rates had risen, and they had made the right choice.

Brendan


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## RedOnion (3 Mar 2020)

Not everyone realised the value of a tracker...





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						I hadn't realised that Eddie Hobbs had suggested to tracker holders that they should fix at 5%!!
					

These are from a thread in January 2010.   Should I get out of tracker? (PTSB : ECB +1.68%)  I have 25 years left to run on the mortgage. I hadn't any specific timeframes in mind as to how long I would fix it for but it's funny that people are ignoring Eddie Hobbs cos that's where I heard it...



					www.askaboutmoney.com


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## Brendan Burgess (3 Mar 2020)

I had forgotten that. Well spotted. 

David McWilliams used to talk about the tracker mortgage time bomb.   When the ECB rates rise, borrowers on cheap trackers are going to be hit very badly.  I pointed out that there already was an SVR time bomb. 

Brendan


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## Mrs Vimes (4 Mar 2020)

I recall in 2006 my brother asking me to look over his mortgage as he couldn't see how long the tracker was for. He was horrified when I told him it was for the life of the mortgage and not just for the first couple of years like the trackers on offer in the UK at that time (and still, I think) and then reverting to standard variable.

He was working in a bank in a back-office type job at the time and couldn't believe the powers-that-be were stupid enough to link trackers to ECB refi rate when it had so little influence on their cost of funds.

He (and I) definitely saw the value of them then.


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## Stitcher (4 Mar 2020)

I knew the value of them too back in the early 2000s. As far as I was concerned, banks were never going to give you a interest rate below the ECB, or else only for a really short term fix, rolling on to a higher than average SVR which they could change up or down as they so decided. The tracker guaranteed you were not far off the ECB for the life of the mortgage at all times so seemed a good choice, and meant you didn't have to worry too much about having to switch if your bank was not reducing variables or not offering new deals to existing customers. To my knowledge all trackers were for the life of the mortgage when they started. That was the beauty of them. When banks started competing then on trying to  have the best tracker rates they went down to very low % above ECB, which were probably unsustainable in the long term (? )  so they were even better value.  But then they started to introduce gimmicky discounted trackers and changing terms and conditions without really explaining to customers.  Seems it was just too difficult for bankers to offer a fair product without messing with it, just like all the other products like short term fixes, cash back offers. I definitely have no trust in them anymore.


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## Brendan Burgess (5 Mar 2020)

Stitcher said:


> Seems it was just too difficult for bankers to offer a fair product without messing with it, just like all the other products like short term fixes, cash back offers.



Very well put.


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## Megafan (5 Mar 2020)

Stitcher said:


> I knew the value of them too back in the early 2000s. As far as I was concerned, banks were never going to give you a interest rate below the ECB, or else only for a really short term fix, rolling on to a higher than average SVR which they could change up or down as they so decided. The tracker guaranteed you were not far off the ECB for the life of the mortgage at all times so seemed a good choice, and meant you didn't have to worry too much about having to switch if your bank was not reducing variables or not offering new deals to existing customers. To my knowledge all trackers were for the life of the mortgage when they started. That was the beauty of them. When banks started competing then on trying to  have the best tracker rates they went down to very low % above ECB, which were probably unsustainable in the long term (? )  so they were even better value.  But then they started to introduce gimmicky discounted trackers and changing terms and conditions without really explaining to customers.  Seems it was just too difficult for bankers to offer a fair product without messing with it, just like all the other products like short term fixes, cash back offers. I definitely have no trust in them anymore.



Back then it was a bonus/commission driven culture in banking anything extra they could squeeze out of a customer they would. I worked in the Capital Markets side of AIB (not frontline or markets or anything important) for awhile as an example and there was a lot of rivalry between that side and the Retail banking side, so it was a little bit of a race to the bottom that infected the industry.

In some ways, it might have been a mistake for banks to withdraw trackers fully, rather than keeping trackers and making them completely uncompetitive when things started to face southwards in 2008 for them. They would ultimately have had to take their medicine on the mortgages which had good tracker rates pre crash but because they in effect crystallised the final rate by pulling them from the market, a good number of mortgage holders slipped through the net in terms of compensation (as a potential example any one of the prevailing rate AIB cohort with clause 3.2 with new mortgages post October 2008).


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