Race against time for AIB and Ulster Bank tracker customers to lock into fixed rates

Tracker mortgage customers with AIB and Ulster Bank have been warned they are running out of time to lock in to attractive fixed rates.

he two banks have some of the lowest fixed rates in the market, but it is expected these rates will be gone in weeks.

Many of those with trackers are considering fixing, especially since the European Central Bank ( ECB) is about to raise its rates for the fifth time this week, a move that will cost customers thousands of euro in extra repayments.

Mark Coan, of consumer finance advisory firm Moneysherpa.ie, said anyone considering ditching a tracker should take financial advice first.

He warned the low fixed rates still available at AIB Group and Ulster Bank were about to disappear.

Ulster Bank customers can still get fixed rates as low as 2.95pc, he said.

And those with AIB, Haven and EBS can lock in to rates of just over 3pc.

Tracker customers opting for these rates, who typically have another 15 years on their loans, could save an average of €7,000 to the end of the term of the mortgage by opting for these fixed rates.

Ulster Bank tracker customers can still lock in to its fixed rates even though these mortgages are being sold to AIB.

Mr Coan said: “It’s very likely that the attractive Ulster and AIB Group rates for existing customers are about to disappear in the next couple of weeks.”

He said fixing would not suit everyone who has a tracker mortgage, but he advised customers of Ulster Bank, AIB, Haven or EBS to get their fixed-rate offer letter and then talk to a broker to see whether they should fix, stay on their tracker or switch.

“In most cases the answer should be fix where you are, but it will be case by case,” he said.

The ECB is set to impose another rate rise this Thursday – in a move that will hit tracker mortgage holders and make borrowing for first-time buyers more expensive.

The fifth ECB rate rise will mean a typical tracker mortgage, with €150,000 left to pay, will have been hit by a combined €2,400 a year in higher repayments since last summer.

It is also expected to lead to another rise in fixed rates. Bank of Ireland has already imposed a second increase in its fixed rates.

The latest ECB rate rise is expected to be 0.5 percentage points.

“Most tracker customers looking to fix to avoid coming rate hikes will get the best deal by switching to a new lender. However, there are some notable exceptions to this rule,” Mr Coan said.

Tracker customers with Ulster Bank are still able to fix for four years with that bank at rates as low as 2.95pc.

These rates are almost one percentage point below any other lender and may even be below the cost of funding these loans.

“If you’re an Ulster tracker customer, you should request your fixed-rate offer letter as soon as possible and weigh up your options before these rates are increased,” Mr Coan added.

AIB Group, which includes Haven and EBS, would be the next best choice for tracker customers looking to fix with their own bank, with four-year fixed rates on offer at just above 3pc.

The average Ulster and AIB Group tracker mortgage holder would save around €3,500 by fixing with their current lender over their remaining term and may avoid the further €3,500 hike when ECB interest rates increased again this week, he said.