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Tracker Mortgages

What is a “Tracker Mortgage”?

Tracker mortgages offer a rate which is set at a margin above the ECB (European Central Bank) base rate. The margin above ECB varies from .5% above to 1.5% above, this simply depends on the type of tracker mortgage you hold.

These mortgages were available from most Irish lenders up to the end of 2008 at which point they were no longer sold but anyone who had one was well advised to hold onto it as the ECB base rate has been practically zero since 2012 and tracker mortgage holders are asked only to pay the margin above, this meant that if you were on a .8% over ECB then you only paid .8% interest on your mortgage.

Why have my Tracker Mortgage repayments risen so much recently??

In an effort to control rising inflation, the ECB have increased rates therefore tracker mortgage holders feel the effects immediately.

Since July 2022 the ECB have regularly increased rates with the most recent increase bringing the base rate to 3%. For those with a mortgage balance of €300,000 with 20 years remaining this could mean a monthly increase in repayments of approx. €433.

If I am on a Tracker Rate should I fix now?

Fixed rates offer certainty for the full fixed rate term. In a period of high inflation, it would seem prudent to consider fixing your mortgage repayments at a level you are comfortable with. With the ECB at a base rate of 3.00% & another potential increase it would be advisable to review your tracker rate as there may be lower fixed rate options in the market.

Should I shop around or just simply fix with my existing lender?

Unfortunately, because these mortgages were unprofitable, many lenders sold off or transferred them to companies like Pepper or Start Mortgages. If your Tracker has been transferred you will not be offered the option to move to a fixed rate therefore you are forced to shop around with other lenders.

If your Tracker is still with a mainstream lender then you should first contact them to ask for your fixed rate options to be forwarded to you in writing.

Once you receive your options you should then seek Independent Advice from a Mortgage Broker, one of our Qualified Financial Advisors would be happy to assist.

When will this rate increase stop?

The ECB have advised that another rate increase of .5% is likely in March and it will then re-evaluate. This trend is likely to continue until inflation rates come under control with the objective of 2% inflation. US interest rates are at 5%.


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