Fixed Rate or Stay on Tracker Rate

Hi Folks
I'd be very interested in people's opinions on the following options I have.

I'm currently on a Tracker Mortgage of 1% above ECB.
I was planning on fixing my mortgage with my bank & got offered 1 yr Fixed at 4.75% a month ago.
Thought it was a great rate so jumped at it. The bank took ages to send out the letter but finally did last week with the agreed rate of 4.75%. I signed the letter and sent it back last week.

My plan was go fixed for 1 yr and then when I come off the fixed rate see what the market is like and probably go back on my tracker mortgage of 1% above ECB.

However I see some banks are now starting to pull the Tracker Mortgages. This will probably spread to all the other banks so I'm concerned that when I come off the fixed rate, I will not have the option to go back on a tracker rate and will have to go on either a fixed or standard var rate, which will be must higher that 1% above ECB.

What do you think I should do? Take the 1 yr fixed or stay on the Tracker Rate of 1% above ECB.

Thanks

Dman said:

My plan was go fixed for 1 yr and then when I come off the fixed rate see what the market is like and probably go back on my tracker mortgage of 1% above ECB.

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The ECB + 1% tracker may or may not be available to you at the end of the 1 year fixed rate.

What do you think I should do? Take the 1 yr fixed or stay on the Tracker Rate of 1% above ECB.

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Do you need to fix for cashflow reasons? Is your lender the most competitive for trackers for your situation?

Stay with the tracker rate - you can't assume that the 1% tracker will be available in one year. Most banks are trying to phase out their tracker rates as they are losing money on them.

I had a chance of .75% tracker last September but fixed for 3 years instead at 5.25, and really regret it.

Dman, I would ask the bank if you will be able to return to your 1% tracker margin after the year. Even if the bank still offers trackers, you might not be able to get the 1% margin.

Secondly, most banks will set the rate based on the date of drawdown. Are you sure the 4.75% is still available to you? 1 year Euribor is 5.38% today. Are they trying to tease you off a tracker rate???

If you cannot get the 1% tracker back then you risk paying a higher margin in the long run. However, if you were planning on fixing anyway, maybe the rate is not as important as the comfort of a fixed monthly repayment. Only you can decide that.

Talk to the bank before making your choice.

VOR said:

Dman, I would ask the bank if you will be able to return to your 1% tracker margin after the year. Even if the bank still offers trackers, you might not be able to get the 1% margin.

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If you do this then get the answer in writing. Being told verbally that it'll be OK or whatever is useless.

Towger said:

There was talk on The Property Pin that not only are the bank phasing them out, but also in the small print (I have not bothered to check) they can change the 'fixed' rate for existing holders.

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I have heard this mentioned before but I have never seen that particular small print and neither have anyone I have asked. I know its not in mine (Ulster Bank) but would be interested to know what providers have the ability to change the margin on tracker mortgages for existing mortgage holders. Especially on mortgages pre 2007. It might have changed in the last 12 months. Anyone know?

Towger said:

There was talk on The Property Pin that not only are the bank phasing them out, but also in the small print (I have not bothered to check) they can change the 'fixed' rate for existing holders. At the moment I am on ECB + .6% = 4.85% ...

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I'm confused. You are talking about both fixed and tracker rates here. They are obviously different classes of rate. What do you mean?

ClubMan said:

I'm confused. You are talking about both fixed and tracker rates here. They are obviously different classes of rate. What do you mean?

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The 'fixed' rate above the ECB rate. eg. ECB + the '60 basis points'.

Dman, As Clubman says you need to get everything in writing. I did the same when getting my mortgage. They wanted to give me one year fix at a reduced rate, but I wanted the tracker, thinking that the .8% at the time was not going to last, and noting that the small print did not guarantee that I would get it, when the fixed rate ended. AIB said their computer systems could not handle it, until I asked them did they not have a copy of MS Word on any of their computers? This then involved waiting 5 mins while they went to speak to the manager. Sure enough I got my letter guaranteeing the tracker.

Towger said:

The 'fixed' rate above the ECB rate. eg. ECB + the '60 basis points'.

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You mean the tracker "margin" so.

Thanks very much for all your replies.
I'm going to ring the bank and see when I come off the 1yr Fixed rate can I switch back to a tracker rate.
Plus going to ask for it in writing.
If I can't I think in the long run I think I'd be better off staying with the tracker rate.
No real need to fix to be honest but just thought 4.75% 1 yr fixed was a great rate, hence the reason I jumped at it.

Dman said:

If I can't I think in the long run I think I'd be better off staying with the tracker rate.

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Do you have a problem with thinking?

No real need to fix to be honest but just thought 4.75% 1 yr fixed was a great rate, hence the reason I jumped at it.

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Even if you can guarantee ECB + 1% in a year's time whose to say that this will be competitive then? Personally I would not fix at all unless really force to do so. Better to stick with a competitive tracker rate if at all possible for long term value. As mentioned above perhaps the 4.75% fixed rate is no longer available if it seems particularly attractive? Offers in principle are always subject to review up to the point at which they are taken.