Switching from EBS SVR to BoI SVR - advice please

Hi,
I owe 200,000 on an EBS SVR of currently 4.43%, with 13 years left. I was happy enough up to 18 months ago, but then they increased my rate by three savage 0.6% jumps in fairly quick succession. I guess this is common knowledge. (My figures might not be 100% correct, but you get the picture).

Now I can switch to BoI to a 3.2% APR SVR which, let's face it, is roughly 150 Euro cheaper per month at the moment. Solicitor's fees for switching are ~600 Euro.

What is the likelihood that BoI could do to me exactly what EBS did once I've signed up?

I can afford the EBS repayments - just - so I could stay where I am. But I couldn't take another 0.6% on top of it again.

The fact that the 3-year fixed rate available from BoI is 5.3%, should I conclude from this that they have more or lass decided that my variable rate will have reached 5% in 18 months?

I realise there are no certainties, but I'd appreciate any opinions on whether I should go ahead and switch.

Thanks a million.
/M.

BoI have political control over the variable rate, whereas the fixed rate is at their own discretion. So the fixed rate indicates what they would like to be charging in terms of margin over interbank rates (cost of funds). So in the case of 3 year fixed, if the interbank rate is about 2.40% their margin required is approx 2.90%. If their cost of funds for variable is approx 2% (average deposit rate per annual report) then they would prefer to be charging variable rate of about 4.40% - an increase of about 1.30%, but their political masters are not allowing them to do that - even for new business.

Thanks marksa, that's a very interesting insight into how these things work.

Don't

Thanks marksa, that's a very interesting insight into how these things work.

Don't the Govt essentially control EBS as well now? So will the same political pressure be applied to EBS, who incidentally aren't offering fixed rates any more?

And with all the talk of BoI needing to raise funds, couldn't they turn around some day and insist to their political masters that a big SVR hike is essential?

I guess the deicsion I have to make is whether it's worth the risk. I'll be starting off with a 1.2% improvement in my rate, and then it's just fingers crossed that the differential doesn't reduce to the extent that I don't end up saving any money in the end ...

If you have the LTV to move, then you may as well. Both EBS and BoI will increase their rates when the ECB puts rates up soon, but with BoI you'll be starting at a lower point, so it COULD take 4/5 rate increase before you get to your previous EBS rate.
But you should expect to be paying move that 5% in the not to distance future. You may also want to look at new-business fixed rates for all the banks, some of these were very good, but that make have changed with the rate rise in April.

If you can move to BOI and save 150 euro a month, at least initially, versus costs of switching of 600, I think you should do so. Unless BOI increases their variable rate very sharply in the first 4 months and EBS does not, you'll save money initially.

I agree with previous poster, when BOI raises interest rates, so will EBS but at least you'll be starting from a lower point with BOI, so will be better off.

If you can afford your current repayments, I think you should switch and save 150 per month into a savings account, to help you in future.

You should also examine your income and expenditure NOW, before rates rise so much you can't afford to cope, to see where you can cut your expenses or boost your income, to save more. Almost anybody can cut back on something or generate some extra income but it's better to do it before you get in difficulty.

Rates will rise eventually, but with BOI you'll buy yourself more time to prepare for the rises.

Thanks for the advice.

Just wondering, with all this talk of BoI needing to raise 5 Billion to avoid being Nationalised, should I be concerned that if they don't get to raise all this money that they might turn around and stick the knife into their SVR customers with a big rate hike?

I presume the money they could raise from hiking their SVR would be miniscule compared to the kind of sums they need to raise, so is it a realistic fear at all?

Thanks again.

Manuel said:

Thanks for the advice.

Just wondering, with all this talk of BoI needing to raise 5 Billion to avoid being Nationalised, should I be concerned that if they don't get to raise all this money that they might turn around and stick the knife into their SVR customers with a big rate hike?

I presume the money they could raise from hiking their SVR would be miniscule compared to the kind of sums they need to raise, so is it a realistic fear at all?

Thanks again.

Click to expand...

well - in terms of selling the bank as a sustainable banking model - it would have to be seen to have a route to profitability. To do that it may have to increase SVR