Should I Fix My Tracker Mortgage – Tracker Mortgage Ultimate Guide Ireland 2022

With interest rates on the rise, should you dump your tracker mortgage and move to a fixed rate? The answer used to be a flat out no, but now the answer depends on two things.

  1. What type of tracker mortgage are you on?
  2. How much can you afford your repayments to rise by?
tracker mortgage

Tracker mortgages come in different flavours based on how much extra interest they charge over the European Central Banks (ECB) base interest rate. 

If you are on a tracker mortgage that charges over 1% above the ECB rate you should probably think about moving now as you are already paying more than you could on a fixed rate at 2%.

If you are on a tracker mortgage that charges less than 1% above the ECB rate, so are still paying less than 2%, it still might make sense for you to move. 

Why? With markets predicting ECB rates to rise to 3% by 2023, this would push up even the cheapest trackers to 3.5%. That’s €300 more a month on the average mortgage.

Unfortunately waiting to see which way things pans out isn’t really an option as lenders could withdraw the ultra low 2% fixed rate deals currently available at any moment.

Don’t panic though, with our ultimate guide, we will walk you through what this means for you and what you can do to keep your mortgage repayments under control.    

  1. What’s a tracker mortgage? Tracker Mortgage Ultimate Guide Ireland 2022
  2. What’s the cost of the ECB rate hike on my tracker mortgage repayments? Tracker Mortgage Ultimate Guide Ireland 2022
  3. Should I fix my tracker mortgage? Tracker Mortgage Ultimate Guide Ireland 2022
  4. How do I fix my tracker mortgage? Tracker Mortgage Ultimate Guide Ireland 2022

What’s a tracker mortgage? Tracker Mortgage Ultimate Guide Ireland 2022

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 1.2% 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? Tracker Mortgage Ultimate Guide Ireland 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. Taking the rate up to a record 2%.

They are doing this to try to reduce inflation by making credit more expensive to consumers. 

But, markets expect this is only the start of it.

Most expect to see a 3% hike in total in the next 18 months or so. With a 0.5%-0.75% increase on the cards before Christmas.

The average Tracker mortgage rate is 1.2% above base rate, so with current ECB rates at 2% the average tracker customer is now paying 3.2%.

So if the Central Bank goes to 3% in the next 18 months, the lenders will pass that on, meaning the average tracker rate will go up to 4.2%. Depending on which tracker rate you are on then, tracker mortgage rates will rise to around 3.5%-5.5%.

The average outstanding mortgage in Ireland is €200,000 and the average term people have left is 15 years.

That makes the average mortgage repayment about €1,400 a month.

So for the average customer a 3% increase is about €300 extra on their monthly repayment.

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 4% higher than now, so would add €400 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? Tracker Ultimate Guide Ireland 2022

A tracker mortgage is a variable rate mortgage so is exposed to interest rate hikes. The average tracker rate is set to hit 4.2% by early 2023.

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 14 years. Most analysts now predict that if ECB rates fall in future a level of around 2% would be the most likely scenario.

The good news is that fixed rates are still available from as low as 2.25%, for most tracker mortgage customers this would keep their mortgage repayments at similar levels to today while capping any potential rises in future.

3 Year Fixed Mortgage Rates up to
50% LTV
up to
60% LTV
up to
70% LTV
up to
80% LTV
up to
90% LTV
Avant Money Mortgage2.25%2.25%2.35%2.45%2.50%
ICS Mortgages3.75%3.75%3.80%3.95%4.05%
Finance Ireland Mortgage5.45%5.45%5.50%5.50%5.85%
Haven Mortgages2.85%2.85%2.85%2.85%2.85%
AIB Mortgage2.85%2.85%2.95%2.95%3.05%
EBS Mortgage3.25%3.25%3.25%3.25%3.25%
Permanent TSB Mortgage3.15%3.15%3.25%3.25%3.85%
Bank of Ireland Mortgage3.25%3.25%3.25%3.25%3.25%

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.

Average Rate (APRC) at LTV < 50%10 Yr15 Yr20 Yr25 Yr30 Yr
Avant Money Mortgages3.26%3.48%3.58%3.58%3.57%
ICS Mortgages
Finance Ireland Mortgages4.63%4.61%4.70%4.86%
Haven Mortgages3.40%
AIB Mortgages3.33%
EBS Mortgages
Permanent TSB Mortgages
Bank of Ireland Mortgages3.70%
APRC is the Average Rate paid across the whole mortgage term

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 3%.

So if you are on a tracker mortgage rate right now that will probably increase your payments, but cap your repayments so there is no risk of going above 3% for the rest of your mortgage term.

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? Tracker Mortgage Ultimate Guide Ireland 2022

There are two ways to fix

  1. Fix with your current lender
  2. 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.

Average Mortgage Rate (APRC) at LTV <50%3 Yr4 Yr5 Yr7 Yr
Avant Money Mortgage2.44%2.50%2.60%2.81%
ICS Mortgages3.85%3.93%
Finance Ireland Mortgage5.11%5.27%
Haven Mortgages3.20%3.20%3.20%
AIB Mortgage 2.82%2.92%2.84%3.13%
EBS Mortgage3.70%3.60%
Permanent TSB Mortgage3.63%3.49%3.58%3.77%
Bank of Ireland Mortgage3.80%3.7%
APRC = Average Rate paid across the whole mortgage term, table, excludes Mortgage value >€250,000, excludes Green mortgages

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. 

  1. It’s not certain how long these low long term fixed rates will be available.
  2. 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 – Tracker Mortgage Ultimate Guide Ireland 2022

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 expected to hit 4.2% by early 2023, 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 – Tracker Mortgage Ultimate Guide Ireland 2022

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 – Should I Fix My Tracker Mortgage?

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. It’s now predicted that the ECB base rate will rise to 3% by 2023, this is 3% higher than it was in July 2022. 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 2022 Ireland?

ECB Interest rates have already increased by 0.75% so far this year, with tracker mortgages rising by the same amount. 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.

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4 thoughts on “Should I Fix My Tracker Mortgage – Tracker Mortgage Ultimate Guide Ireland 2022”

  1. 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:

  2. 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.


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