# PTSB Tracker variable rate (ECB + maximum 1.68%) currently 5.43% - competitive?



## thejuggler (5 Dec 2008)

Looking for some advice here.  I'm coming to the end of a two year fixed rate with Permanent TSB (fixed at 4.8%)
As usual they have sent me a letter outlining my options which are as follows
Tracker variable rate (ECB + maximum 1.68%) currently 5.43%
2 or 5 year fixed 5.75%
7 or 10 year fixed 6.1%
To give you some background I am 6 years into a 30 year term.  The mortgage amount was 156k (about 135k outstanding) and the LTV (depending on your valuation - similar houses were selling for 360k in 2006 - today who knows??) is under 50%
I don't want to fix again as interest rates are still falling and I would hope to move at some point in the future so would like the flexibility.
This tracker does not seem very competitive although I presume after yesterdays rate cut by the ECB it will be down to 
4.68%
What should I do?  Is there better value out there or should I ask PTSB for a standard variable rate or a better rate given my LTV?  
Hope to phone them later - just trying to figure out my best approach.


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## Dreamerb (5 Dec 2008)

Actually, after yesterday's rate cut, ECB is 2.5%, so ECB + 1.68 = 4.18. There's no harm in seeking a lower tracker margin given that your LTV is so low - the worst they can do is say no. 

In my opinion you should grab a tracker with both hands and hang on for dear life; ECB will probably go lower still early next year, and we're probably in for a sustained period of low rates because of the general economic environment. It's a great opportunity to knock lumps off the mortgage if your income is secure, just by maintaining your current payment. Silver linings, and all that...


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## Spin (5 Dec 2008)

Check your loan offer to see if a specific spread is mentioned after the fixed rate expires i.e 1% over ECB. This tracker rate offered is off the walls. You can get a variable rate from AIB at 4.50% and if they pass on the full reduction it will be  3.75%. Permaneent TSB were offering tracker's 18 months ago of 0.60% over ECB on a loan to value of 50% so there is no value in what they are offering now. 
Hope this helps.
Spin
Mortgage Broker


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## csirl (5 Dec 2008)

ECB + 1.68 is very very high. I bet they lower it if you ask.


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## Dreamerb (5 Dec 2008)

Spin said:


> Permaneent TSB were offering tracker's 18 months ago of 0.60% over ECB on a loan to value of 50% so there is no value in what they are offering now.


18 months ago was a totally different financial environment - contrasting what was available then doesn't actually mean there isn't value in a higher margin tracker. 

If AIB passes on the full rate cut this time, their variable will look pretty attractive - but that doesn't mean they'll pass on the near-guaranteed next cut(s), which a tracker _must_.


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## MentalNote (5 Dec 2008)

Errrmmm I'm afraid to say this out loud in case they have made a mistake. I am coming to the end of a one year fixed with PTSB (first year of a 35 year mortgage), and received a letter saying according to the terms of my mortgage I am being moved to a tracker rate (ECB + max 0.800). I really can't remember that being agreed when taking the mortgage, so I will need to unearth the documenation. Not that I'm complaining mind...


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## riddles (5 Dec 2008)

I just rang PSTB there to confirm that I was on a tracker rate mortgage - they confirmed I was;

Its ECB + .95%

Essentially I was on 4.75% so on 20years term he said the payments 

December 776€ 4.2%
January   729.73 drops down to 3.45%

They are passing on the rate cut on the 2ND of January


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## thejuggler (5 Dec 2008)

Just spoke to PTSB and they wouldn't budge on the margin but said that the latest rate reduction would be applied on january 2nd.  They said that they weren't offering trackers any more but they would honour the offer on the letter if I sent it back straight away.


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## Mammyto2 (5 Dec 2008)

I have just posted the same question above before I looked down and saw this one!
I got the same letter, stil cant make up my mind whether a good option or not.


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## rameire (5 Dec 2008)

its a terrible rate, sure you could go to aib for a rate fro 1 year at something like 3.6% look around if they dont budge, tghe only prob is banks will not be paying switcher fees or solicitors fees anymore, so add about 1000 to your bill


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## djkat (8 Dec 2008)

just tried to get my tracker rate (1.68% above ecb) reduced from ptsb but no joy


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## Dreamerb (8 Dec 2008)

rameire said:


> its a terrible rate, sure you could go to aib for a rate fro 1 year at something like 3.6% look around if they dont budge, tghe only prob is banks will not be paying switcher fees or solicitors fees anymore, so add about 1000 to your bill


It's really not a terrible rate. It's nothing like as good as some of the rates that were on offer in 2006 / 2007, and even earlier this year, but it is respectable. Bear in mind that some of the last trackers left on the market in recent months were at margins of +2.05% or so - people were still going for those. 

I can't see any AIB rate of 3.6% - best I see is 4.5% (nominal) on their published rates
(here - [broken link removed]), although that will come down to 3.75% since they've committed to passing on the latest interest rate reduction. 

But the key thing about the tracker is that it _tracks_. You're guaranteed that further ECB rate reductions will be passed on; with variable rates you are not. Taking the 3.75% rate now may well cost the OP money, since it's very commonly believed that ECB rates will reduce to 2% within months and may go as low as 1.5% by mid-2009. There is absolutely no guarantee that the banks will pass on / pass on in full any further rate cuts in their variable rate products: market volatility suggests they may not. Factor in that the OP would almost certainly incur switching costs of probably at least €1000 as well and the alternative rates on offer will have to be guaranteed to stay at least 0.5% below the tracker rates for at least two years simply in order to fund the cost of switching. [Rough calculation based on the OP's current mortgage balance, and assuming switch costs do not exceed €1000]. So that's two years before any savings can possibly be made. 

Since PTSB won't offer a reduced tracker margin, the OP should check what variable rate they'll offer, and see if there's an immediate pay-off that might make the risk of losing future reductions worthwhile - but I think switching for anything less than a better guaranteed tracker would be an unduly expensive gamble.


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## rmelly (8 Dec 2008)

MentalNote said:


> Errrmmm I'm afraid to say this out loud in case they have made a mistake. I am coming to the end of a one year fixed with PTSB (first year of a 35 year mortgage), and received a letter saying according to the terms of my mortgage I am being moved to a tracker rate (ECB + max 0.800). I really can't remember that being agreed when taking the mortgage, so I will need to unearth the documenation. Not that I'm complaining mind...


 
This sounds right, given the time frame - is it < 80% and <500k?


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