Ulster Bank and the mystery of the shifting tracker repayments

Pat contacted Pricewatch saying he has been bemused by correspondence from Ulster Bank in connection with his tracker mortgage of late.

“I have a tracker mortgage with approximately four years left. Every time the ECB raises the base rate, I get a letter informing me of the rise and showing my current payment and what it will be when the rise has been applied,” he says.

As many as 160,000 people will be wearily familiar with these letters with 10 of them issued to all tracker mortgage holders since July 2022.

This is where the confusion starts.

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In September 2022 the European Central Bank hikes its rates by 0.75 per cent and Pat was told that his monthly mortgage payments would climb by €21.33 – or €7.11 per quarter of a point.

Last February he got a letter saying the rate was climbing by half a per cent, which would amount to €12.19, which, divided by two, works out at €6.10 per quarter of a point.

But then, in July, the ECB hiked rates by quarter of a per cent and he was told by his bank that it would see his rate climb by €38.69.

“I phoned Ulster Bank asking about the difference. He then got a letter saying the new amount he was being asked to pay was correct. “This does not answer the question I asked. I immediately phoned the bank again.”

He spoke to a staff member who “agreed that the question had not been answered. He said he would “escalate it” and I would be contacted the next day. No contact was made with me.”

Then the ECB hiked its rates again and he got another letter saying that the 0.25 per cent rate increase would cost him a further €6.11 a month. “I don’t think there is much point in me phoning them again. Any advice?”

We got in touch with Ulster Bank and a spokeswoman said ECB rate changes “can be announced at different dates in the month and, depending on the date, this can affect what remaining mortgage term is brought into the customer’s calculation (for example, it might be one month shorter than it would have been on a different date). This can lead to variations in repayment but with each of the repayments included in a customer’s letter correct, based on what the term remaining was at the point when the repayment was calculated after each ECB announcement.

“These variations in repayment between different rate changes can be an aspect of applying ECB rate changes to mortgage repayments, with any small residual or surplus balance at the end of the mortgage term reflected in the final repayments.”