Key Post I have an Ulster Bank tracker – should I consider fixing?

[Brendan Burgess]

What will happen if I stay on my tracker?

While permanent tsb is acquiring the non-tracker mortgages from Ulster Bank, AIB is acquiring the tracker mortgage book.

So your mortgage will move to AIB.

Apart from the shocking treatment of tracker customers, AIB has treated its mortgage customers fairly – well, fairly in comparison to other lenders.

• It does not maintain an artificially high default variable rate, and so lazy or busy customers coming off fixed rates don't find themselves paying a super-high rate. (The default variable rate for a customer with >80% LTV with AIB is 3.15% compared to 4.5% for Bank of Ireland.)
• It allows existing customers to avail of the rates on offer to new customers (even though we had to embarrass them into changing their policy on this)
• It does not try to trick customers with very large cashback
• It had an unfair way of calculating break fees, but again we embarrassed them into bringing this into line with their legal obligations and, in fact, customers can benefit from a peculiarity in the result.

Conclusion: AIB is likely to be good value in the long term, so you do not need to consider switching to another lender.

What will happen if I fix now?

Update and correction: 19th September 2022: if you fix a tracker now, your mortgage will still be sold to AIB, not ptsb.

The normal considerations apply:

• If you fix, assume you will not get your tracker back when the fixed rate ends
• If you have an expensive tracker, say, ECB + 1.75% or higher, you should probably fix
  • Note: "ECB + 1.75%" means "European Central Bank rate plus an extra 1.75%" (a margin of 1.75%). Check your mortgage contract.
  • See here for AIB's fixed rates
• If you are planning to trade up or overpay your mortgage, you probably shouldn't fix, as you may face early repayment penalties on a fixed rate, which don't apply to trackers
  • But if you are planning to trade up in, say, 5 years and your tracker is not particularly "cheap" (e.g., if it's ECB + 1.5% or higher), you could consider fixing on Ulster Bank's 5-year rate. (Note the word "consider".)

The Ulster Bank website says:

If you want to get in touch with us to request a Fixed Rate Quote or breakage fee or wish to order a statement please email: ECBRateIncrease@ulsterbank.com and include your name, account number and contact details. A member of our team will be in touch you within 48 hours.

---

The below information is obsolete because it was previously thought that anybody with an Ulster Bank tracker who fixed would have their mortgage sold to ptsb. In fact, such customers will have their mortgage sold to AIB.

So you should only consider fixing in the following circumstances – and note that I say "consider".

1. You have a very short term left on your mortgage
2. You have an "expensive" tracker, e.g., ECB + 1.75% or higher
   • Note: "ECB + 1.75%" means "European Central Bank rate plus an extra 1.75%" (a margin of 1.75%). Check your mortgage contract.
3. You have a very small balance remaining on your mortgage
4. You fix for a long-enough period that when the fixed rate ends you won't be a customer of ptsb for very long
5. You are definitely planning to trade up in a few years' time and so will be paying the costs of "switching" (moving home) anyway
   • In such cases, fix for a period just short of when you plan to trade up
   • Note that if you have a "cheap" tracker (ECB + 1% or lower), fixing might not be a good idea. You might be able to take your tracker with you when you move home but its interest rate will probably increase. (Check your mortgage contract.)

If none of the above applies to you, you should stay on your tracker. Of course, the danger is that fixed rates may rise before your tracker mortgage is sold to AIB, but I don't think that there is anything you can do about that. Once your mortgage has been sold to AIB, you can re-evaluate whether or not it makes sense to fix with AIB.

 

[Brendan Burgess]

If you want to ask whether you should fix or not, please provide the following information:
1) Existing tracker margin. (This is set in your mortgage contract.)

• If your tracker margin is 1%, please state it in the following format to avoid confusion: ECB + 1%

2) If you have an additional mortgage on the same property, what is the rate?

• E.g., "Fixed at 2% with three and a half years of the fixed-rate period remaining."

3) Amount outstanding on your mortgage

• If you have both a tracker and a second mortgage on the property, specify the amount outstanding on each

4) Remaining term
5) Lender
6) Value of your home
7) Might you trade up or overpay your mortgage?
8) Do you face any barriers to switching? E.g., an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage, you are now renting out the property.
9) What rates are you considering fixing at?
10) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary.
11) How well could you handle a further 2% rise in the ECB rate?

 

[Brendan Burgess]

Ulster Bank does not allow people with trackers to fix online. So you will have to call them They are taking a long time to respond to calls. Rates may have risen by the time they get back to you.

So if you do decide to fix,

Call the phone number and make a note of the time and the day and the response they get.

Then send a letter by registered post to Ulster Bank saying
"I called you on
I could not get through.
I wish to avail of the following rate fixed until 31 December 2027



I understand that I will not be able to return to my tracker rate at the end of the fixed rate period.

[if appropriate: Please reduce the term of my mortgage to x years]

Yours faithfully

 

[Parking1]

Hi,

Another request for your advice here. I think I have this figured out with help from another thread, but just posting here to double-check my thinking.

1) Existing tracker margin: ECB + .95%
2) Amount outstanding on your mortgage €51,604
3) Remaining term 8yrs 4mths
4) Lender Ulster Bank
5) Value of your home €278,506
6) Might you trade up or overpay your mortgage? I have €17k ready to overpay now as a lump sum. I also want to pay around €750p/m going forward, in order to reduce the term to about 4 or 5 years. (If fixing, I expect I would need to pay the lump sum and arrange the term change before the fix). I will receive a pension lump sum payout in three years which will give me the option to clear my remaining mortgage (as long as I also make the lump sum overpayment I can afford now).
7) Do you face any barriers to switching? No
8) What rates are you considering fixing at? 2yr fix @ 2.2% with UB (fixing with current lender, not looking to remortgage with other lenders)
9) Does your house have a high BER rating which might qualify it for a lower rate? Unsure. It is a newish house (~17yrs old) so maybe, but when I search on the BER register it says no result found. I have emailed SEAI to enquire.


So:
Whether fixing or not, lump sum payment of €17k now, to reduce my balance. Perhaps reduce mortgage term.


With the potential to clear the mortgage with a lump sum in 3 years, the longest fix that might make sense is 2yrs (currently at 2.2%)

From what I've read here, my tracker mortgage rate will come to 2.2% later this month anyway. It will probably go up further, but over 2 years the savings of a fix wouldn't be huge due to my low remaining balance.
After coming off the fix I would likely be faced with a much higher interest rate than I would have if I'd stayed on the tracker, potentially negating any savings from the fix period. If I chose to pay off my mortgage in full when my pension came in, then I would be on this higher rate for a year, but if for some reason I didn't want to or could not pay it off at that point, I would be on it for the remaining duration of the mortgage.

Also, if I stay on the tracker, perhaps there is no need to adjust my term - I can just overpay monthly as I like (knowing that Ulster will adjust my automatic repayments downward due to the overpayments)

Staying put seems the sensible option.

Does my thinking seem sound?

Thank you
P

 

[cian8]

1) Existing tracker margin 1.15%
2) Amount outstanding on your mortgage 92k
3) Remaining term 18yrs
4) Lender Ulster Bank
5) Value of your home 163k
6) Might you trade up or overpay your mortgage? Unsure (we are accidental landlords for all the obvious reasons we would probably sell, but we are currently housing a family member and unless they get a local authority house this is unlikely to change)
7) Do you face any barriers to switching? E.g. an impaired credit record, a mortgage with a warehoused portion due to a restructuring, reduced income since you took out your mortgage. No
8) What rates are you considering fixing at? ? Perhaps 5 year fixed rate with UB at 2.25%
9) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. No

Thanks in advance for advice!

 

[March11]

Hi there, would appreciate thoughts also on our situation please. House is rented and not our residence.
1). ECB + 1.15 gone upto 1.65 this mth.
2). €174,543 remaining on mortgage.
3). 22 years 11 mths left.
4). UB
5). As per UB current HPI value €272k.
6). No
7). Yes restructured in April on home.
8). Dont know.
9). Dont know built in 2009.

Thank you so much.

 

[Brendan Burgess]

2) Amount outstanding on your mortgage €51,604

I have €17k ready to overpay now as a lump sum.

OK, so your net mortgage balance is €34,000

Let's say you fix for 2 years at 2.2%. Your mortgage will now be a fixed rate and will be sold to ptsb.


Your repayments will be as follows:


That does seem like the right idea.

Let's say that at the end of the two years the ECB rate is back down to 0% (Very unlikely) and the ptsb fixed rate is 3% , you will be paying 2% more than you would otherwise be paying.

But as your balance will be down to €17k , that is only €340.

So go ahead with your plan:
1) Pay the cash off the balance.
2) Fix the rate for 2 years.

Brendan

 

[Brendan Burgess]

6) Might you trade up or overpay your mortgage? Unsure (we are accidental landlords for all the obvious reasons we would probably sell, but we are currently housing a family member and unless they get a local authority house this is unlikely to change)

Sorry, I do not understand this at all.

Is the mortgage you are considering fixing on your family home or on a property you have let to someone else?

 

[Brendan Burgess]

House is rented and not our residence.

5). As per UB current HPI value €272k.

2). €174,543 remaining on mortgage.

As the house is rented, I would suggest that you remain on your tracker. Any change might well trigger a review of the mortgage and they may try to charge you the buy to let rates which are far higher.

7). Yes restructured in April on home.

This is a more important issue for you.

You haver restructured the mortgage on your home, thus impairing your credit record, while you have €100k equity in an investment property. Sounds as if you are doing something very wrong. This is not the right thread to discuss it. You should consider posting the full details in the money makeover forum:

Money makeover

Budgeting and dealing with debt moved to Mortgage Arrears and Debt Forum .

www.askaboutmoney.com

 

[March11]

As the house is rented, I would suggest that you remain on your tracker. Any change might well trigger a review of the mortgage and they may try to charge you the buy to let rates which are far higher.



This is a more important issue for you.

You haver restructured the mortgage on your home, thus impairing your credit record, while you have €100k equity in an investment property. Sounds as if you are doing something very wrong. This is not the right thread to discuss it. You should consider posting the full details in the money makeover forum:

Money makeover

Budgeting and dealing with debt moved to Mortgage Arrears and Debt Forum .

www.askaboutmoney.com

Thank you Brendan. Sorry i may not have explained that correctly, we consolidated debts and remortgaged with Finance Ireland. Thank you.

 

[cian8]

Sorry, I do not understand this at all.

Is the mortgage you are considering fixing on your family home or on a property you have let to someone else?

Sorry Brendan. It is rented out to a family member (they are availing of HAP), they do not have the means to accommodate themselves independently for the foreseeable future. We will not evict them but if they got a house (they are on housing list) we would probably sell.

 

[Brendan Burgess]

It is rented out

The tenant is irrelevant.

It is a buy to let and you should not fix as you will be charged the Buy to Let rates and your mortgage will be sold to permanent tsb.

Brendan

 

[Brendan Burgess]

we consolidated debts and remortgaged with Finance Ireland.

Are you saying that in a thread about Ulster Bank you are asking about a Finance Ireland mortgage?

I will delete your posts from this thread as it seems to be irrelevant and too complicated and distracting for this thread. It is a Money Makeover issue – please read this thread and then post a new thread in that forum describing your situation.

Brendan

 

[RebelRebel20]

Hi Brendan,

I would love your advice please.

1) Existing tracker margin ECB + 2.0 % will also need to add new ECB rate increase of .5% in August & .75% today (We moved house and took tracker with 1.0 % added and 10 years only, tracker is gone in 9years as was only for original mortgage)
2) Amount outstanding on your mortgage €243.000
3) Remaining term 24 years
4) Lender UB
5) Value of your home €390,000
6) Might you trade up or overpay your mortgage? No
7) Do you face any barriers to switching. No
8) What rates are you considering fixing at? Unsure what to do but would probably only think of fixing for 10 /20 years. Could you advise any long term good fixed rate products?

 

[Brendan Burgess]

@RebelRebel20

This is very difficult.

If you fix, you will be sold to ptsb.

If you don't fix, you will be sold to AIB but by the time that happens, fixed rates may have risen.

fixing for 10 /20 years

Ulster Bank's longest fixed term is 10 years which will be 2.95%
But if you can get your mortgage down to 60% LTV, the rate falls to 2.8%.

That's not a bad rate. Go for it.

After that you will be subject to ptsb's predatory lending policies. They might have changed by then, but the Central Bank has allowed them to exploit customers for 14 years now, so I doubt it will change. But keep your credit record clean and you should be able to switch to another lender then if ptsb has not changed its spots.

Brendan

 

[Paul F]

But if you can get your mortgage down to 60% LTV, the rate falls to 2.8%.

@RebelRebel20 If you get a property valuation of €405k or higher, your LTV will be 60% and you will be eligible for the 2.8% rate.

Alternatively, if you made a lump sum overpayment of €9k, your LTV would fall to 60%.

But before you do either of those things, log in to UB's Manage My Mortgage portal and check the value that they think that your property has. It might be €405k or higher already.

 

[RebelOg]

@RebelRebel20

This is very difficult.

If you fix, you will be sold to ptsb.

If you don't fix, you will be sold to AIB but by the time that happens, fixed rates may have risen.


Ulster Bank's longest fixed term is 10 years which will be 2.95%
But if you can get your mortgage down to 60% LTV, the rate falls to 2.8%.

That's not a bad rate. Go for it.

After that you will be subject to ptsb's predatory lending policies. They might have changed by then, but the Central Bank has allowed them to exploit customers for 14 years now, so I doubt it will change. But keep your credit record clean and you should be able to switch to another lender then if ptsb has not changed its spots.

Brendan

Thank you Brendan, was speaking with UB, we are fixing with UB for 10years, rate 2.95. With just recently moving & only 9years left on tracker we would rather know our repayments for next 10years

 

[Tomo225]

Hi Brendan , I would be very grateful for any advice my situation below,
1) Mortgage Rate: Tracker ECB +1.15%
2) Amount outstanding on your mortgage:€195k
3) Remaining term: 20 years
4) Lender: Ulster Bank, soon to be AIB
5) Value of your home: 340k
6) Might you trade up or overpay your mortgage? Not going to trade up, my over pay
7) Do you face any barriers to switching: No
8) If I was switching I would probably go for 10 year fixed from Haven or one of those providers?
9) Not sure BER rating, but house is pretty well insulated

I have 8k I could knock off the mortgage straight away, is this worth doing, with rates gone up another. 75%,.

Any advice I would be very grateful thanks guys.

 

[Brendan Burgess]

1) Mortgage Rate: Tracker ECB +1.15%

AIB is a good lender to be with long-term.

1.15% margin is not too dear or not to cheap.

I think I would stay on the tracker, and make a decision as soon as your mortgage is switched to AIB.

The danger is that AIB may raise fixed rates before you become one of their customers.

Brendan

 

[ToFixorNotToFix]

Thanks Brendan. Head is wrecked on this! I have actually sent the fixing form to UB - it should be landing on their desk today - but I have a month to change my mind! The security of the fixed rate is very attractive at the moment.

1) Existing tracker margin. (This is set in your mortgage contract.) ECB + 0.95%
2) Amount outstanding on your mortgage: ~€94000
3) Remaining term: ~11 years
4) Lender: Ulster Bank
5) Value of your home: ~€275000
6) Might you trade up or overpay your mortgage?: Probably not.
7) Do you face any barriers to switching? Yes, wife no longer works outside home.
8) What rates are you considering fixing at? 2.8% for 10 years (form gone in!).
9) Does your house have a high BER rating which might qualify it for a lower rate? Check it here or estimate it if necessary. No.