Homeowners will now be able to move house without having to give up their low interest tracker mortgages.
Trackers are linked to the rate set by the European Central Bank, which currently has an historically low rate of 0.5%. With 375,000 homeowners currently on tracker mortgages, many are reluctant to move for fear of losing their favourable rates – something which is having an effect on an already sluggish property market.
Now two banks are set to let homeowners keep their trackers if they move house though. Bank of Ireland will allow movers to keep their trackers for five years if they relocate while Permanent TSB is close to signing off on a new deal that will see families moving keep their tracker rate for the rest of their loan period.
With both banks, the tracker rate will apply only to the outstanding amount of the mortgage and any extra funds needed to buy a new home will have to be borrowed at a variable or fixed rate.
At present, someone with a €300,000 mortgage is paying around €450 a month less than someone on a variable rate with a mortgage of the same size.
With Bank of Ireland and Permanent TSB providing these new mortgages, it brings to three the number of banks that will allow you to move and retain your tracker. Ulster Bank already allows its customers who are moving home to keep their tracker rate on the existing balance owed on their home and transfer this to the mortgage on the new home.
People who are trading down – and do not need to borrow extra money – will be able to benefit from the deal but those in arrears will not.
AIB, EBS, Danske Bank and KBC Bank said they had no plans at the moment to allow their customers to move house and keep their trackers.