With interest rates on the rise, you’re probably wondering should I fix my tracker mortgage? The answer used to be a flat out no, but now the answer depends on two things.
- What type of tracker mortgage are you on?
- How much can you afford your repayments to rise by?
Check out our Tracker Mortgage Ultimate Guide Ireland 2023 to find out more.
Tracker mortgages come in different flavours based on how much extra interest they charge over the European Central Banks (ECB) base interest rate.
The average tracker in Ireland charges 1.15% above the ECB base rate based on the latest data from the Irish Central Bank. If you are on a tracker mortgage that charges over 1% above the ECB rate you should think about fixing your tracker as you are already paying more than you could on a fixed rate.
If you are on a tracker mortgage that charges less than 1% above the ECB rate, it still might make sense for you to fix your tracker mortgage.
Why? With markets predicting ECB rates will stay around 4.5% into 2024, this would push up even the cheapest trackers to over 5% and most to an average of 5.65%.
Based on the average outstanding tracker value of €81,322 and a term of 15 years we have calculated the average savings by fixing at an forecast ECB rate of 3%-3.5% and expected future ECB rates below.
| Tracker to Fixed Rate Example Savings Average | Current APRC | Current Repayment | Monthly Saving | Total Saving |
|---|---|---|---|---|
| ECB 3.0% +1.15% Tracker (Best Case) | 4.15% | €608 | €39 | €7,091 |
| ECB 3.5% +1.15% Tracker (Mid case) | 4.65% | €628 | €60 | €10,817 |
The numbers above assumes the ECB rate does not come down below these rates for the remaining term. The latest ECB survey of expert forecasters indicated that most experts expect ECB rates to stay high until 2024 and then level off between 3-4% after that. It is very unlikely that rates will ever return to the levels seen after the 2008 financial crisis.
Unfortunately waiting to see which way things pan out isn’t really an option as lenders are likely to withdraw the ultra low fixed rate deals currently available at any moment.
So, should you fix your tracker mortgage?
Fixing your tracker is a big decision, once you fix there is no going back to your tracker rate. If you don’t fix however you are at risk of significant increases in your monthly repayments. Every case is different, so getting advice from a qualified mortgage advisor before making the final decision is crucial.
Check out us sharing our advice for tracker mortgage holders on Ireland AM or read on to find out more.
- What’s a tracker mortgage?
- What’s the cost of the ECB rate hike on my tracker mortgage repayments?
- Should I fix my tracker mortgage?
- How do I fix my tracker mortgage?
What’s a Tracker Mortgage?
A tracker mortgage is a mortgage that follows or ‘tracks’ the ECB base rate. These mortgages were introduced by banks in the Celtic Tiger years in an attempt to cash in on the Irish housing boom.
Depending on the lender and when you signed up, rates ranged from 2.5% above the ECB base rate down to as low as 0.5% above the rate. The average tracker rate is 1.15% over the ECB base rate.
After the financial crash of 2008 ECB interest rates plummeted to 0%, this made tracker mortgages very attractive for consumers and loss making for the banks.
As a result Irish banks withdrew all tracker mortgages from the market and attempt to move a number of customers off tracker mortgages to try to reduce their losses. This is known as the ‘tracker mortgage scandal’ [1] resulting in customers losing homes and millions of euros in both costs and fines levied on the Irish banks.
What’s the cost of the ECB rate hike on my tracker mortgage repayments?
In 2022 the European Central Bank raised the ECB base rate that tracker mortgage rates follow from 0% to 0.5% in July, added a further 0.75% in September and 0.75% in November, then 0.5% in December.
Most recently in February this year the ECB added a further 0.5% and announced it will hike rates by 0.5% again in March and 0.25% in June. All this takes the ECB rate to a record 3.75%.
That means the average tracker rate has gone from 1.15% to 4.95% in just 8 months, adding over €24,000 in total to the cost of the average tracker mortgage of a 15 year term. Depending on which tracker rate you are on then, tracker mortgage rates will rise to around 4.0%-6.0%.
They are doing this to try to reduce inflation by making credit more expensive to consumers.
But, markets indicate the ECB may put through even more increases before the summer’s out.
Most now expect to see a further 0.25% hike before July.
The average outstanding tracker mortgage in Ireland is €81,322 and the average term people have left is 15 years. By fixing onto the best rate on the market the average tracker customer will save €10,817 at an ECB rate of 3.5%.
You can calculate your own potential savings with our handy tracker calculator here.
The average savings based on switching to the best rate in the market are below.
| Tracker to Fixed Rate Example Savings Average | Current APRC | Current Repayment | Monthly Saving | Total Saving |
|---|---|---|---|---|
| ECB 3.0% +1.15% Tracker (Best) | 4.15% | €608 | €39 | €7,091 |
| ECB 3.5% +1.15% Tracker (Medium) | 4.65% | €628 | €60 | €10,817 |
Here’s the savings range from the highest tracker to the lowest as well, just in case you need it.
| Tracker to Fixed Rate Example Savings High & Low | Current APRC | Current Repayment | Monthly Saving | Total Saving |
|---|---|---|---|---|
| ECB 3.0% +2.25% Tracker (Best) | 5.25% | €654 | €85 | €15,383 |
| ECB 3.5% +2.25% Tracker (Medium) | 5.75% | €675 | €107 | €19,267 |
| ECB 3.0% +0.75% Tracker (Best) | 3.75% | €591 | €23 | €4,162 |
| ECB 3.5% +0.75% Tracker (Medium) | 4.25% | €612 | €44 | €7,830 |
You can check out our explainer video here or read on to use our handy tracker calculator and get the full lowdown on the pro’s and con’s of fixing.
But, there is no reason that rates won’t go higher.
In the early 2000’s for example Central Bank interest rates were around 4.5%, that’s 1% higher than now, so would add €100 to the average monthly repayment.
If increases of that order may potentially cause issues with making your mortgage repayments, then you should think about fixing.
Should I Fix My Tracker Mortgage?
So should I fix my tracker mortgage? A tracker mortgage is a variable rate mortgage so is exposed to interest rate hikes. The average tracker rate is now 4.65%, increasing the average repayment by 28% or €24,000 over a 15 year term.
With inflation across Europe still on the rise it’s not clear how high rates might go or when they might come back down again.
In fact, the near zero interest rates we have had since 2008 have been historically unprecedented and may believe that rates may never return to the levels we have seen for the last decade. Most analysts now predict that if ECB rates fall in future a level of around 2.5%-3.0% would be the most likely scenario.
Most experts agree that ECB rates are unlikely to return to previous rates for many years if at all.
The good news is that fixed rates are still available from as low as 3.5%, for most tracker mortgage customers this would keep their mortgage repayments at similar levels to today while capping any potential rises in future.
| Fixed Term APRC | Avant Money | MoCo | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland | Bank of Ireland (Re-fixing) |
| 3 Yr | 3.87% | 5.21% | 4.00% | 3.82% | 4.20% | 4.21% | 4.90% | – | 6.26% | 4.40% |
| 4 Yr | 3.92% | – | – | 3.78% | – | 3.99% | – | – | – | – |
| 5 Yr | 3.94% | 5.06 | 4.30% | 3.93% | 4.50% | 4.43% | 4.90% | – | 6.20% | 4.40% |
| 7 Yr | 3.97% | – | 4.60% | 4.33% | – | 4.59% | – | – | – | – |
The catch is that these low fixed rates are only available for 5 years or less and so when you come off them you still could be vulnerable to higher ECB base rates.
If you really want certainty then you can fix for up to 30 years right now with some lenders.
| APRC at LTV < 50% | Avant Money | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland | Bank of Ireland (Re-fixing) |
| 10 Yr | 4.00% | 4.70% | 4.76% | – | – | 5.20% | – | – | 4.70% |
| 15 Yr | 3.95% | – | – | – | – | – | – | – | – |
| 20 Yr | 3.95% | – | – | – | – | – | – | – | – |
| 25 Yr | 3.95% | – | – | – | – | – | – | – | – |
| 30 Yr | 3.95% | – | – | – | – | – | – | – | – |
This would cap your repayments for the rest of your mortgage.
If you go to a broker 15-30 year fixed mortgages are still available for around 4.2%.
Obviously if tracker mortgage rates go down below the rate you fix at you will miss out on any savings, but you have to trade this off against the certainty you will get by fixing.
For most people we think these long term fixed rates offer great value as you are paying a low premium for the certainty they provide by capping future repayments.
How do I fix my tracker mortgage?
There are two ways to fix
- Fix with your current lender
- Switch and fix with a new lender
The best fixed rates are those with the newest lenders in the market Avant Money and Haven. So the chances are if you fix with your current bank you will end up paying more than you should. The table below shows how the different lenders stack up.
| Fixed Term APRC | Avant Money | MoCo | Haven Mortgages | AIB Mortgage | EBS Mortgage | Permanent TSB | Bank of Ireland | ICS Mortgages | Finance Ireland | Bank of Ireland (Re-fixing) |
| 3 Yr | 3.87% | 5.21% | 4.00% | 3.82% | 4.20% | 4.21% | 4.90% | – | 6.26% | 4.40% |
| 4 Yr | 3.92% | – | – | 3.78% | – | 3.99% | – | – | – | – |
| 5 Yr | 3.94% | 5.06 | 4.30% | 3.93% | 4.50% | 4.43% | 4.90% | – | 6.20% | 4.40% |
| 7 Yr | 3.97% | – | 4.60% | 4.33% | – | 4.59% | – | – | – | – |
Every 0.1% = €1,800 on the cost of the average mortgage over the full term, so not fixing onto the best rate could end up costing you tens of thousands in the long term.
So fixing with Bank of Ireland would cost you almost €25,000 more than if you were to fix with Avant Money.
That’s why we strongly advise that you talk to a broker to see what options you have.
Make sure the broker has access to all the lenders, will switch you for free and has experience of switching tracker mortgages. You can book a call with a broker now below.
We wouldn’t hang around having that first conversation with your broker for two reasons.
- It’s not certain how long these low long term fixed rates will be available.
- There is a rush to fix nationwide which is causing backlogs right now.
The good news is that you may be able to fix with your current lender while you are in the process of switching to a better fixed rate without being charged any breakage fees. This is because under EU law lenders can’t charge breakage fees when rates are on the rise.
This means you can ensure your rates don’t rise while you are waiting to complete your switch to a new lower cost lender.
In A Nutshell
Although tracker mortgages have been fantastic value since 2008 as a variable mortgage they are exposed to rate rises. With ECB rate rises the average tracker rate is now 4.95%, much higher than current fixed rates.
These rates may go even higher and most analysts believe that tracker rates are unlikely to ever return to the rates seen since the 2008 crash.
That’s why fixing your rate to cap your repayments is the right option for most people and they should talk to a broker as soon as possible to get the best fixed rate, before fixed rates rise.
Next Steps
You can find out more about switching your mortgage here or with our mortgage switcher guide here.
You can get the full run down on mortgage switching solicitor and estate agent valuation costs here.
Frequently Asked Questions
Why should I fix my tracker?
A tracker ‘tracks’ the European Central Bank (ECB) base rate, this means that if the ECB rate goes up your mortgage repayments will also rise. You should fix your tracker if you want to be certain what your monthly repayment will be.
Is now a good time to fix your mortgage in Ireland?
As rates are currently on the rise, fixing makes a lot of sense right now. The ECB base rate will be 3.5% by March 2023, this is 3.5% higher than it was in June 2022. Increasing the average cost of a tracker mortgage by €24,000 over a 15 year term, that’s 28% more. Fixing will cap the impact of these rises on your mortgage repayments.
What are the disadvantages of fixed rate mortgages?
Obviously if rates fall in the future, you may be locked into your fixed rate and be payment more. However, the certainty of capping repayments outweighs this disadvantage for most mortgage holders. Break fees may also apply if you want to move house, switch or pay your mortgage off early. Some lenders are more flexible than others, so you should talk to a mortgage broker about which lender will suit you best.
Is it better to go with a fixed or variable mortgage?
For most people a fixed mortgage is a much better option as it will cap your repayments. With a variable mortgage may be at risk if you are unable to make repayments due to rising interest rates. Fixed rates are also generally lower than variable rates in Ireland due to the amount of competition for new business making them doubly attractive. Fixed rates may not be the best option however, if you are looking to change your mortgage within the fixed term.
Will interest rates go up in 2023 Ireland?
ECB Interest rates have already increased by 0.5% so far this year, with tracker mortgages rising by the same amount. The ECB has already announced a further 0.5% in March with another increase possible before the summer. This would bring the ECB lending rate to 4% and the average tracker to 5.15%. New fixed rate deals have also been on the rise and variable rate mortgages are likely to rise, by the end of the year also. Further ECB rate increases, which drive all other rates in the market, are expected. However, fixed rates are currently available at 3.19% APRC almost 2% lower than the predicted average Tracker rate.
Will interest rates come back down?
Most experts agree that interest rates are unlikely to fall to previous levels for many years and possibly never. The near zero interest rates seen post the 2008 banking crisis were unprecedented and are unlikely to return. As Central Banks continue to battle stubbornly high inflation into 2023 most expect interest rates to continue to rise.
9 thoughts on “Should I Fix My Tracker Mortgage? – Tracker Mortgage Ultimate Guide Ireland 2023”
I have tracker with bank of ireland .about €50.000.00 left to pay.till 2030.should I cap tracker now.gone up twice in last 2 weeks from 585 to €610. Thanks
Hi Fidelma, the key question here is your ability to repay if rates continue to rise. The market predicts ECB rates will go to 3%+, so for a +1% tracker that would be 4%. On €50,000 with only 8 years left even if it goes to 3% that will be another €40 a month on top of what your paying now. If you want a more accurate assessment you can book a call here:
Hi, I have a tracker (+0.75%) with KBC with 80 months left and €110.000 left to pay. Should I get a fixed rate? I can get a fixed rate for two years at 3.1% and then it will go back to my tracker after that.
Hi there, you have quite a good tracker @ +0.75%, the average tracker is 1.2% so whether you are better to fix or not will really depend on your willingness to risk higher repayments. With more than 6 years left and over €100,000 left to pay it is definitely worth talking to a broker to get advice on what your options are. One thing to note though is you won’t be able to go back onto your tracker if you do fix, so you should probably consider fixing for 7 years so that you aren’t exposed to the higher variable rates, that way you will cap your repayments for all of your remaining term. You can book a free advice call with one of the moneysherpa advisors here.
Hi There,
If I move from my tracker to a fixed when the fixed period expires can I go back on the tracker ?
Hi Donal, thanks for getting touch. Moving to a fixed rate caps your repayments, but once you move from your tracker rate you will not be able go back onto a tracker rate. This is why it’s important to get advice from a qualified mortgage broker before giving up your tracker rate. Capping your repayments by fixing long term is often the better option than sticking with a tracker which is exposed to further rate rises, but not in all cases so i’d advise getting one on one advice as soon as you can to help decide.
Hi Mark,
I called Ulster Bank to get my fixed rate offers after reading your advice over the wkd. I have €89K left on a 1.15% tracker (so 3.65% today), and I have an offer of 3.10% for four years fixed. I have 9 years left, but have been overpaying to reduce it to 6 years. I think Ill fix?
PS – good to see Money Sherpa taking off!
Hi Sinead, thanks for your post. Fixing on the Ulster rates makes 100% sense! For anyone but Ulster we are now advising people talk to their broker before fixing their rate. Thanks, Mark
Please note that Ulster have now also increased their fixed rates so for most people now switching will probably be the best option.