When will we see the rate cut (for those on tracker mortgages?)

L

landlord

Registered User
Messages
1,073
Firstly the rate cut was announced yesterday 08/10/08, does that mean the cut took place yesterday, will take place today 09/10/08 or will take place some other time?

Secondly say I am due to pay my tracker mortgage on the 20th of October , will I have to wait until the 20th of November, before I see the drop.

My mortgage is with NIB, but I don't think that is relevant?

thanks........
 
AFAIK the effective date for the rate cut is the 15th so hopefully your tracker will change on that day. My mortgage gets paid on the 12th so I just miss out this month
 
landlord said:
Firstly the rate cut was announced yesterday 08/10/08, does that mean the cut took place yesterday, will take place today 09/10/08 or will take place some other time?

Secondly say I am due to pay my tracker mortgage on the 20th of October , will I have to wait until the 20th of November, before I see the drop.

My mortgage is with NIB, but I don't think that is relevant?

thanks........
Click to expand...

NIB,s terms and conditions on my tracker say when a rate is changed by the ECB, the new rate will be applied to your loan within 3 working days. As it is a reduction I would say it will be the full 3 working days from the Wednesday 15th which is Monday 20th.

You should get the full benefit of the reduction in your November payment, your October payment will be unchanged
 
The terms & conditions of a specific tracker mortgage should state when ECB rate changes flow through to the borrower.
 
Besides the increase of monthly payments if the rate goes up is there any disadvantage to getting a tracker mortgage. Our fixed term is up this month and everyone is advising us against a tracker mortgage. All i can see is benifits if the interest rates come down.
 
Unless you must fix due to cashflow issues then a competitive tracker rate is the best bet on minimising the long term cost of your mortgage.

Who is telling you a tracker is not a good idea? What reasons are they giving you? Do your specific circumstances (outstanding mortgage amount and term, house value, net income, other debts and outgoings etc.) dictate that fixing is a better idea?
 
Agree with Clubman. Remember that by fixing you paying a premium for the bank to take the interest rate risk away from you. If you can afford to take the risk yourself i.e you can still afford repayments if interest rates rise, then there is no need to pay this premium. You may go for fixed e.g. if your budget is so tight that you cannot afford to pay anything above the quoted rate.
 
csirl said:
Agree with Clubman. Remember that by fixing you paying a premium for the bank to take the interest rate risk away from you. If you can afford to take the risk yourself i.e you can still afford repayments if interest rates rise, then there is no need to pay this premium. You may go for fixed e.g. if your budget is so tight that you cannot afford to pay anything above the quoted rate.
Click to expand...

People should stress test themselves in deciding what to go for.

Take a 30 year €250k mortgage for someone with a disposable income of €2500pm.

Assuming a +1.25% tracker (Currently 5%) the monthly repayments are €1355pm. This leaves €1300pm to live on after mortgage interest relief.

Take a 5.5% fixed rate. Repayments are €1433pm. This leaves €1233pm to live on after mortgage interest relief.

If interest rates increase by 2% the fixed rate repayments remain the same with the tracker repayments increasing to €1680pm leaving less than €1000pm to live on.

Personally I think an awful lot of people would be wiped out if interest rates rose by this amount and it is not an inconceivable move. Also given that so many people would be in the same boat the impact would be multiplied.

As was stated already, a fixed rate basically includes a premium for passing on the risk of potential rate increases. I get slightly nervous when the default advice is for homeowners to take the risk rather than pay the premium and feel it is worrying that long term fixed mortgage rates are not more popular
 
DerKaiser said:
People should stress test themselves in deciding what to go for.
Click to expand...
I agree. I just get fed up posting the same thing over and over again...
I get slightly nervous when the default advice is for homeowners to take the risk rather than pay the premium and feel it is worrying that long term fixed mortgage rates are not more popular
Click to expand...
Default advice from whom? I and most other people who recommend trackers almost always do so with caveats covering the sort of scenario you outline.
 
You must log in or register to reply here.
Back
Top