# Coming off Fixed Rate and being offered a tracker rate



## Dublin6 (14 Jul 2009)

Hi

This is a similar post to the key post on coming off the ptsb discounted tracker and being offered a different tracker rate. However, my situation is a little different.

I have been on a fixed 2 year rate with ICS of 4.79%. This is due to end on 28 August.

I called ICS yesterday and asked what options would be available to me. The Customer Service Rep stated that I would receive letter in 2 weeks which would offer me
1. The new 2yr fixed rate (currently 3.15%)
2. A 3 yr Fixed rate
3. The standard variable rate (currently 2.70)

And then she said ICS would also offer me a tracker rate of ECB + 1.1%. I was somewhat taken aback and asked was she sure as my original loan offer letter mentions the fixed rate and the standard variable rate only. She confirmed it would be offered.

So reading my contract last night I discovered the Special conditions clause, that states at the end of the fixed rate period, if the lender cannot offer you a fixed rate or a standard variable rate then the lender will offer a rate that is not more than the ECB rate +1.1%.

It seems odd that they would offer me this tracker rate, seeing as I was on a fixed rate, and have never previously been on a tracker rate. Naturally, I would like to take up the offer of the tracker rate as it will reduce my repayments significantly.

Now I know I need to wait for the letter due to arrive in two weeks, and believe it when I see it. But has anyone heard of this, coming off a fixed rate and being offered a tracker rate? Can it be true?


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## Red (14 Jul 2009)

Great news if it is Dublin6. I thought all trackers were a thing of the past......


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## DerKaiser (14 Jul 2009)

yeah, a lot of fixed mortgages had the option to roll over onto a tracker rate at the end of the fixed period.

Two points here are:
1) The banks should spell this out clearly in any correspondance
2) Anyone with a mortgage should read the contract, particularly the bit that describes what rates of interest will be charged


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## flatcat (14 Jul 2009)

Dublin6, there must have been something in the original writing that allowed it to move over to a tracker. 

I'm going through the same thing at the moment - fixed expires later this month and rang bank to weigh up options - thought it was just down to going fixed again or variable but they said I was entitled to go onto tracker. 

News to me (like it was to you) as it was never mentioned or written down when applying for mortgage. 

Have it down in black and white in writing now and going for tracker - happy days!


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## smiley (14 Jul 2009)

Did the Government put pressure on the Irish banks in relation to this??

They must have. The banks are been just too nice here!


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## DerKaiser (15 Jul 2009)

smiley said:


> Did the Government put pressure on the Irish banks in relation to this??
> 
> They must have. The banks are been just too nice here!


 
Not sure the banks are being nice.  If this was in someone's contract the bank should be required to inform people of this option.  

If it was found that they had deliberately mislead people as to what their options were, e.g. by excluding it from any correspondance, they would be on very shaky ground.

A lot of mortgages were taken out in 2006/2007.  Fixed terms of 2 to 3 years with the option to roll over onto a tracker were very common contracts.  

It seems to me that the financial regulator should be reminding people that they may have this option judging by posts I've seen here.


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## Dublin6 (15 Jul 2009)

This is the wording (buried) in our contract. This would not clearly indicate to me that they would be obliged to offer us a tracker rate. But great news if they do! Any thoughts?

At the end of the fixed rate period the Lender shall have sole discretion to provide any further or subsequent fixed rate period. If the Lender does not provide such a further or subsequent fixed rate period of if the Lender offers the Borrower a choice of interest rate at the end of the fixed rate period and the Borrower fails to exercise that choice then in either case, the interest rate applicable to the loan will be a variable interest rate. The variable interest rate may vary upwards or downwards. The interest rate shall be no more than 1.10% above the European Central Bank Refinancing Operations (Repo) Rate for the term of the Loan.... In the event that, or at any time time, the Repo rate is certified by the Lender to be unavailable for any reason, the interest rate applicable to the Loan shall be the Home Loan Variable rate.


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## mro (15 Jul 2009)

To me that reads that the variable interest rate applied if you dont take a fixed rate will be "no more than 1.10% above the European Central Bank Refinancing Operations (Repo) Rate for the term of the Loan" ..................ie a tracker


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## DerKaiser (15 Jul 2009)

Looks good for you.

Just to say again, there is no reason to be surprised. Fixed rate mortgages with a guaranteed tracker margin at the end of the fixed period were a very common contract in 2006/2007


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## DiGiTaL (15 Jul 2009)

Maybe banks are thinking that with the rates so low that if they offer people trackers, the rate can only go up at which point people will start to fix at a higher rate than originally offered. Does that make any sense.


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## DerKaiser (15 Jul 2009)

DiGiTaL said:


> Maybe banks are thinking that with the rates so low that if they offer people trackers, the rate can only go up at which point people will start to fix at a higher rate than originally offered. Does that make any sense.


 
Or you could just accept that there's a clause in these contracts specifying that you can roll onto a tracker at the end of the fixed period.  

It seems like a simple explanation and an open and shut case to me.

Is it so hard to believe or understand?  

Does everything have to be some kind of conspiracy?

Aren't these issues complex enough without trying to muddy the waters?

Sorry to go off on a rant but trying to find wrongdoing in a bank complying with its contractual obligations only distracts attention from the actual wrongdoings they are guilty of.


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## flatcat (15 Jul 2009)

Dublin6, I have the same wording in my contract e.g. 1.1% above variable rate and I'm rolling over to a tracker. 

There wasn't any discussion at the time about me being offered this exact type of rate - as other people have said here it must have been a standard contract around this time - I took out mortgage in summer 07. 

I don't think you should be having doubts that it is a tracker but you prob won't be convinced till you get it in writing! 

One thing you might want to do is take advantage of the lower rate by overpaying your mortgage...you can always reduce it or go down to the standard payment if rates start to rise (as they will inevitably do). 

By the way I'm not suggesting that banks aren't disclosing this to customers - it's just come as a surprise to some of us that it was part and parcel of their contract. Who knew that tracker mortgages would become so valuable - prob didn't pay enough attention to it at the time.


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## grazzer (21 Jul 2009)

Hey there same thing happened to me and am now saving 700 a month!!!


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## eimear25 (28 Jul 2009)

sorry for dragging this one up!

i'm also on a ICS fixed rate of 4.79% - due to finish on 30 November.  I've just checked my offer letter and it has this special condition in it too.  

does this mean I will be offered the tracker?   it makes a massive difference to our repayments - €600 per month if we get offered it (going by today's ECB rate).   

If they didn't offer me the tracker, could I point out this clause to them?


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## NorfBank (28 Jul 2009)

If your loan offer states that you have the option to go on a tracker a the end of the fixed rate then ICS will offer you this option.

If not then by all means point out the relevant clause to them.



www.moneybackmortgages.ie


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