Is now the time to fix??

Madame Razz

Is now a good time for anybody on a variable mortgage to consider going back to a fixed rate, or should it be given another month or two??

D3PO

Madame Razz wrote: »

Is now a good time for anybody on a variable mortgage to consider going back to a fixed rate, or should it be given another month or two??

there is never a good time to fix. Banks dont guess what rates will go to when setting their fixed rates they make sure they wont lose out.

Madame Razz

Yes but with the ECB rates set to rise again surely the fixed rates will rise with it??

will1977

D3PO wrote: »

there is never a good time to fix. Banks dont guess what rates will go to when setting their fixed rates they make sure they wont lose out.

Disagree, I fixed my rate just before the last time there was intrest rate increase and saved a fortune. There are a few good fixed rates available. I have recently re-fixed mine after a period on variable with AIB @ 3.19 which I believe the rate will be above sooner rather than later

D3PO

will1977 wrote: »

Disagree, I fixed my rate just before the last time there was intrest rate increase and saved a fortune. There are a few good fixed rates available. I have recently re-fixed mine after a period on variable with AIB @ 3.19 which I believe the rate will be above sooner rather than later

3.19 for 3 years their standard variable before they pulled it was 2.25


that prices in 4 rate rises until the fixed rate matches the standard variable. In the mean time you will ahve been paying more up to that point.

Unless you expect 4 rate rises in the next year there is no way thats more beneficial, yes eurostat says we are out of recession official int he eurozone and we can all expect rates to rise probably q1 timeframe, but its unlikely we will see a full point rise any time soon enough for a 3 year fixed to become beneficial.

i mean it has to not only have that full point rise but then probably go a further point in the next 2 years for the fixed to be a better option.

Nobody expects 8 rate rises in the next 24 months.

D3PO

will1977 wrote: »

Disagree, I fixed my rate just before the last time there was intrest rate increase and saved a fortune.

I find that hard to believe. I looked at 5 year fixed rates 3 1/2 years ago before the rate increses out of curiosity although i never considered moving off my tracker

I cant remember the exact numbers but I can remember the fixed rate on offer by BOI & AIB at the time would have brought my monthly repayments up from approx 1400 a month to 1800 a month

even with all the rate rises my mortgage only peaked at a little over 1800 a month which was what i would have been paying all the time on the fixed rate.

so i basically would have spend probably 4 1/2 years out of a 5 year fixed rate having been paying more.

beeno67

D3PO wrote: »

3.19 for 3 years their standard variable before they pulled it was 2.25


that prices in 4 rate rises until the fixed rate matches the standard variable. In the mean time you will ahve been paying more up to that point.

Unless you expect 4 rate rises in the next year there is no way thats more beneficial, yes eurostat says we are out of recession official int he eurozone and we can all expect rates to rise probably q1 timeframe, but its unlikely we will see a full point rise any time soon enough for a 3 year fixed to become beneficial.

i mean it has to not only have that full point rise but then probably go a further point in the next 2 years for the fixed to be a better option.

Nobody expects 8 rate rises in the next 24 months.

You are being a little simplistic in your analysis of interest rates. Currently AIB offers a variable rate of 2.25% as you say. This puts it 0.95% below its fixed rate. It is reasonable to assume AIB will increase its margins by another 0.5% (as TSB did). I think most analysists expect this to happen. That puts the difference between the two at 0.45%. This will happen without any ECB rate rise.

If ECB rates average 0.5% higher over the next 3 years (which again most analysts expect.) then fixing at 3.19 makes sense. Even if you feel AIB will not increase its margins all you need is for ECB rate to average 2% over next 3 years. It does not need to increase 4 times in next year as you say. It is the average over 3 years.

D3PO

beeno67 wrote: »

. It is reasonable to assume AIB will increase its margins by another 0.5% (as TSB did). I think most analysists expect this to happen. .

why is it reasonable to expect that ? Besides which if Im not right TSB increased their margins by 0.25

if they were going to increase the margin on their variable its fair to assume they would hAve already done it with their fixed rates, thats generally how the banks work in margin increases.

Madame Razz

Yup I was offered 3.19% this morning, going from 2.25%.

Don't know what to do tbh.

D3PO

beeno67 wrote: »

It does not need to increase 4 times in next year as you say. It is the average over 3 years.

clearly its the average i didnt want to put too many figues in here I just wanted to keep it pretty straight forward for the OP.

Out of interest when do you see the rates beging to rise and how many rises are you predicting for next year ?

Also would you not accept that the banks economists will have already worked out how many increases are likely to come down the line and what the "average" will be and then topped this up to insulate thier calculations ?

Banks dont gamble on interest rates

beeno67

D3PO wrote: »

why is it reasonable to expect that ? Besides which if Im not right TSB increased their margins by 0.25

if they were going to increase the margin on their variable its fair to assume they would hAve already done it with their fixed rates, thats generally how the banks work in margin increases.

It is reasonable to assume because margins are at one of the lowest ever. Add to that, despite NAMA banks are facing huge losses and need to increase their income. By the way PTSB increased their rates by 0.5%.

D3PO

Madame Razz wrote: »

Yup I was offered 3.19% this morning, going from 2.25%.

Don't know what to do tbh.

at the end of the day we are only giving opinions here. If the security of knowing what your outgoings are going to be appeals to you regardless of weather this may or may not be more than you would pay otherwise over 3 years then that has to be factored into your decision.

personally speaking I dont believe the average rates of a variable will be 3.19% over the next three years.

beeno67

D3PO wrote: »

clearly its the average i didnt want to put too many figues in here I just wanted to keep it pretty straight forward for the OP.

Out of interest when do you see the rates beging to rise and how many rises are you predicting for next year ?

There don't have to be any interest rate rises in next year average ECB rate to average over 2% over 3 years.

Madame Razz

D3PO wrote: »

at the end of the day we are only giving opinions here. If the security of knowing what your outgoings are going to be appeals to you regardless of weather this may or may not be more than you would pay otherwise over 3 years then that has to be factored into your decision.

personally speaking I dont believe the average rates of a variable will be 3.19% over the next three years.

Well, I know that there is security in fixing of course, but having said that it's a very small manageable mortgage anyway, so it's no biggy really.

However my old fixed term ended at the start of this year, and even tho my mortgage is small I was most impressed by the drop my repayments took.

So obviously I don't want to be in a position whereby I'm paying over the odds unnecessarily(as I was for while), but I don't to be stung by not fixing in a few months time.

beeno67

Madame Razz wrote: »

Yup I was offered 3.19% this morning, going from 2.25%.

Don't know what to do tbh.

Just to add to this. If you are not in negative equity, BoI are offering 3 year fixed rates of 2.9%.

Madame Razz

beeno67 wrote: »

Just to add to this. If you are not in negative equity, BoI are offering 3 year fixed rates of 2.9%.

No negative equity here thank fcuk; I bought LONG before the madness, we didn't even have euros at the time:p

Changing mortgage providers sounds like hassle tbh, tho that's a very good rate.

D3PO

beeno67 wrote: »

There don't have to be any interest rate rises in next year average ECB rate to be over 2% over 3 years.

true but your then assuming that ECB rates will rocket in year 2 & 3.

Trichet is a conservative as are most of the policy commision within the ECB thats not going to happen the same way we were never going to get to zero rates like the UK & US.

Trichet has a record of making small changes sitting on his hands seeing how that plays out and then looking at making further cuts / rises in rates.

I do agree bank margins are very low at the moment, but I also expect that we will knw more after the NAMA haircut guidlines come out today. Its not inconcievable that the banks will require further recapatilisaion and in terun have to be nationalised if the haircuts are too harsh.

if that happens I can almos gaurantee you that the banks will not increase their margins on mortgages, but would look to do so elsewhere in their portfolios

D3PO

beeno67 wrote: »

Just to add to this. If you are not in negative equity, BoI are offering 3 year fixed rates of 2.9%.

that is an excellent rate over three years. I suspect thats with an ltv of less than 80% though ?

beeno67

D3PO wrote: »

true but your then assuming that ECB rates will rocket in year 2 & 3.

Trichet is a conservative as are most of the policy commision within the ECB thats not going to happen the same way we were never going to get to zero rates like the UK & US.

Trichet has a record of making small changes sitting on his hands seeing how that plays out and then looking at making further cuts / rises in rates.

Saying rates will have to rocket in years 2 and 3 is again misleading. You could have 0% increase this year, then say one 0.25% increase every four months for the following 2 years.

It is all guesswork really. Having said that, it would be amazing if rates were not higher in 3 years time. The only question is how much higher. The very best the OP can gain is 0.9% if rates do not change for next 3 years. If it is a €80,000 outstanding mortgage with 10 years left that will save her at best €33 a month. I would definitely fix, potential gain €33, potential losses much higher.

D3PO

beeno67 wrote: »

Saying rates will have to rocket in years 2 and 3 is again misleading. You could have 0% increase this year, then say one 0.25% increase every four months for the following 2 years.

.

not true check your maths. That would give you an average rate of 3.0% over the 3 year term. anyway I still contend that even at that 8 interest rate hikes in 2 years would be rates rocketing

beeno67

D3PO wrote: »

not true check your maths. That would give you an average rate of 3.0% over the 3 year term. anyway I still contend that even at that 8 interest rate hikes in 2 years would be rates rocketing

ECB has only had 2 real periods of rate rises. Between April 1999 and June 2000 it increased rates by 2%. (2 of those increases were 0.5%) and again between Jan 2006 and June 2007 it increased rates by 2% again. On neither occasion did people say rates were rocketing.