Mortgages Manager Helen Slattery recently wrote an opinion piece for the Nenagh Guardian where she offered her expert insight into mortgages, in particular, tracker mortgages.
Needless to say, mortgages and the housing market has been one of the hot topics in the past six months. The entire landscape is ever-changing and it’s important to keep your finger on the pulse to make sure that you’re not paying more than you need to.
There are three types of mortgages. You will probably have heard of these; fixed, variable and tracker mortgages. Most recently, tracker mortgages came into our line of sight, for the wrong reasons.
Tracker Mortgage
Now, historically speaking – a tracker mortgage has been a safe bet. It is a loan where the rate of interest is based on and tracking the European Central Bank (ECB) interest rate. The ECB rate has been at a historically low rate of 0% for the last number of years meaning that tracker mortgage holders have been availing of extremely low interest rates. We are now hearing that the ECB is set to increase its rates throughout the year and tracker mortgage holders can expect an increase in their rates. For example, if the ECB’s rate increases by 0.25% your interest will mirror this hike. In 2022, it is expected that we will see three interest rate hikes for these ECB mortgages.
Fixed Rate Mortgage
Never in my career have I switched a tracker mortgage – until May 2022. There are many rates available to people now which are lower than what the tracker could potentially raise to. In the current market, the lowest rate SYS Mortgages can secure for you is 2%. So, many home-owners have taken the leap and switched to a secure & consistent fixed rate, by switching their mortgage. They will then not be subject to increased repayments as they would be if they remain on a tracker mortgage.
Switching your mortgage has been popular for quite some time, as people will save money when their broker sources a lower rate. Since the ECB has announced it’s likely to increase its rates, more and more people are jumping ship to secure a fixed rate. In fact, you could save thousands during the lifetime of your mortgage. A typical €250k mortgage over a 25-year term will increase by approximately €63pm or €756pa if the rate increased by 0.50%. Before switching, you might want to consider the interest rate on your mortgage and if it’s a fixed rate, would there be a breakage fee involved? The most crucial factor now is whether you can get your mortgage switched before the rates increase.
Communicating With Your Broker
We recommend speaking with you mortgage broker, who can help you understand what you need before switching and who can provide you with a refinance calculator which will outline potential savings. Then, once all the information is gathered, hand that over and let us do the work for you.
Here at SYS Mortgages, we use our expertise to find our clients the most competitive rates, the most suitable lender and the best financial outcome for them. No two mortgage applications are the same and we pride ourselves in being with our clients every step of the way. Whether you’re a first-time buyer, buying to let, a home mover, a mortgage switcher or building, we will help you achieve your goals.
Start Your Mortgage Journey
If you are interested in having a consultation with a member of the SYS Mortgages team, email helen@sysmortgages.ie or call 067-57059.
This information aims to give information and not advice.
