Ulster Bank Fixed rate ending - should I switch now?

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Wiresandmore

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@PickerUpper - thanks for sharing that. We also have a period house, and with UB too. I hadn’t factored in a survey.

We have 18 months left at 2.5%, 400K outstanding, break fee will be 6 months interest (I’ve discovered the interbank rates were erratic when we fixed so we have to pay the 6 months cost). So cost to break is 5000 + legal + potential structural survey = 7300 or so, which would be 5800 with the Avant offer. We’d save about 180 per month I think. So net/net it probably still makes sense to move, I think.
 
@Wiresandmore When did you fix your mortgage (month and year) and for how long? I calculated your break fee before and it was lower (~€3,400).
 
@Wiresandmore
€400k
Interest differential: .55% (2.5% -1.95%)
18 months saving: €3,300
+ switcher fee: €1,500
Total benefit: €4,800

So if the break fee exceeds €4,800, it's not worth switching.
 
When the fixed rate is up, you will need to calculate it again. But it's very likely to be worth switching then.

ptsb will be taking over the Ulster Bank mortgages. I have made a submission to the CCPC that Ulster should pay the costs of switching as the need to switch is not of the customer's making. I don't expect it to be a condition, but you never know.

Brendan
 
Brendan Burgess said:
@Wiresandmore
€400k
Interest differential: .55% (2.5% -1.95%)
18 months saving: €3,300
+ switcher fee: €1,500
Total benefit: €4,800

So if the break fee exceeds €4,800, it's not worth switching.
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The break fee is exactly €5000 (2.5% x 400K x 0.5).

The logic to do it would be that anything like 1.95% won’t be available in late 2023 when the fix rate ends. Our LTV is well under 50% so we should always get a competitive option to switch at that point.
 
@Paul F - Yes you did, and I followed up with them to get the exact quote from UB, it’s going to be 6 months interest. The other interbank calc comes up with a higher number apparently.

It was mid-Sept 2018, 5 year fix at 2.5%.
 
Previously you said that you fixed in September 2019. Was it actually September 2018?

If it was September 2018, I estimate that the break fee is now about €4,650.

When did you get the quote from them that said it would be six months' interest? Was it a few months ago?
 
Wiresandmore said:
The logic to do it would be that anything like 1.95% won’t be available in late 2023 when the fix rate ends.
Click to expand...

It was probably the same reasoning which led to this:
Wiresandmore said:
It was mid-Sept 2018, 5 year fix at 2.5%.
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You might well be right, but you might well be wrong.

On the one hand, Irish mortgage rates are too high and competition is intensifying which will bring them down.
On the other, ECB rates won't stay at 0% forever.

Brendan
 
Paul F said:
@Wiresandmore When did you fix your mortgage (month and year) and for how long? I calculated your break fee before and it was lower (~€3,400).
Click to expand...


Yes, my error, it was Sept 2018. I’ve had that quote in writing as recently as Dec. But I will check again this week.
 
Just a follow-up on this: I rang them and they offered me a 2.2% 5-year option (and it would be a very easy move, just paperwork to sign with them and a break fee to pay via debit card.) I will request the break fee in 2 weeks time as that would be the point I’d consider the move.

10% p.a. overpayment is available.

What’s also interesting is that the max overpayment fee is 6 months interest on the sum you overpay over the 10%. But that’s not actually all that much at that rate - it’s effectively 1.1% charge on the additional funds (e.g. 100K overpay is 1100 interest over 6 months at 2.2%).
 
You probably realise this but remember that at some point this year UB will withdraw the option for existing customers to switch to a different rate. The longer you wait the lower the break fee will be. But if you wait too long the UB->UB switch won't be an option.

It looks like your break fee might now be down to €3,900. That is because the two-year swap rate is increasing.

If you switch to Avant and get the €1,500 cashback, in five years' time you will be better off by about €4,500 (minus whatever it costs to get a survey done). So it boils down to deciding how much the convenience of the easy option (UB->UB) is worth to you
 
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Paul F said:
You probably realise this but remember that at some point this year UB will withdraw the option for existing customers to switch to a different rate.
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Hi Paul

Is this based on some hard evidence? Or is it a guess on your part?

I think that Ulster Bank would be crazy to do that as a lot of customers would switch before the mortgage is sold. But maybe that is what they want.

Brendan
 
Brendan Burgess said:
Is this based on some hard evidence? Or is it a guess on your part?
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Oops, I shouldn't have said "this year". I'm thinking about the point in the future when PTSB buys the mortgages, and at that point (I assume) the only rates available to former UB mortgage holders will be the prevailing PTSB rates.

Do you think it could play out differently?
 
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