About to come off fixed interest rate......

Scruff101

I know this has been asked a few times already but just want to check again. Have been on fixed rate since June 2007....this is due to end obviously in June...just wondering what's the best thing to do now. We fixed at 4.9 I think....can we expect to get lower rate....I'm thinking of maybe fixing it for another few years?
Any advice appreciated...thanks!!

[Jackass]

I've been out of Ireland about a year now, but what's ECB? About 1%?

Historically, interest rates are extremely low right now. ECB is around the lowest level it's ever been.

The reason for the rate reductions has been to allow business's and people to borrow cheaply and get the finance markets moving again, therefore speeding recovery from the global recession.

When countries like Germany and France begin to make a recovery, the rates will increase.

Therefore, the current market is very good time to fix. Anything under 5% is a good fixed rate imho. Banks are absolutely raping you in Ireland though with the fixed rates, as greed wasn't left at the door when they nearly bankrupted the country (and hence my leaving it).

I'd say shop around for the best fixed rate and move lender, as now that you'll be on a variable rate, there's no break funding fee.

Get a good 5 year introductry rate. Now is the time to move lenders, reward competetive introductry rates. Very few, if any, lenders are worth sticking to at the moment.

Best of luck.

(I'm QFA qualified by the way, but you should always discuass decisions of this magnitude with your broker.)

corkalien

I'm in the same boat scruff. I fixed at 4.99 in 2007 and an coming off it this month. We're stuck with Permanent TSB cos we're well in negative equity and they've offered us rubbish rates.

Tracker Variable Rate (ECB + 3.25%) : 4.25%
LTV Variable Rate: 4.15%
2 Year Fixed: 5.25%
5 Year Fixed: 5.75%
7 Year Fixed: 6.1%
10 Year Fixed: 6.1%

Personally out of these my preference would be the tracker - the ECB is going to be low for a while and the bank won't be able to put it up at a whim like they will with the variable.

I think the fixed are too high to go for - the only one I'd consider would be the 5 year.

Opinions?

Mr Bloat

I wouldn't mind a little bit of advice on the same topic, please.

I'm coming off a 3 year fixed of 5.15 with EBS and they gave me the following options to re-fix:

3 Year - 4.7
5 Year - 5.3
10 Year - 5.95

First off, is it mad to fix for 10 years? I've heard some financial advice guys on the radio say that most of Europe fixes for 10 years or more most of the time but us Irish have a big issue with fixing for this length of time - it seems that we think we can 'beat the system' if we fix for less than 10 years. If it isn't mad to fix for 10 years, is it mad to fix at 5.95?

Assuming I'm told it's mad to fix for 10 years, should I go for 3 or 5 at those rates? On one hand, given the mad stuff going on with the banks at the moment, I would expect interest rates to be high for the next few years but will they be high for 5 years?

I realise I'm practically asking any advice givers to peer into a crystal ball but any advice will be appreciated!

corkalien

What variable options are they offering?

Scruff101

Been in contact with mortgage broker....apparently I'm stuck with the lender I'm with...cos my loan to value rate is over 100%...looks like my rate will be going up...had hoped it might come down!!!

Drumpot

There is no "one fits all" answer to Fixed v Variable.

If your LTV (Mortgage value to value of property) is 80% or less, you should consider moving your mortgage as you may be able to get a significantly better rate (many mortgage companies offer good introductory/Fixed rates).

The question of whether or not you should fix is a personal one. Why do you want to fix ? How many increases can you afford in the next couple of years ? Does your mortgage provider offer you half fixed and half variable (KBC used to).

Most people have no intentions of moving over the next 3-5 years, so being stuck in a fixed interest mortgage (and penalties for early payoff) is not as limiting as it used to be. . If you are concerned of how rate increases will effect you in the future and you feel that the comfort of knowing exactly what your mortgage will be, will be of relief, you should fix.

As a decent barometer, I say to add 2% extra onto your mortgage and see how this will effect your budget. . If it cripples you, I believe you should fix. If you find it wont make much of a dent in your budget, then that's where you decide whether or not to take the gamble. In my opinion only people who can afford to take that gamble should consider variable. But that's my opinion . .

Before gambling (trying to get information on how rates may go), I would decide what element of risk you can afford. I am conservative and prefer the safer option for peace of mind. I fixed in Feb and would fix today (even with .5% extra) simply because I like to know how much my mortgage will be and dont have to worry about the rates. Also, by the time Im off the fixed rate, I would hope that there is some level of stability in the country.

pjmn

An option that you could consider is fixing part of your mortgage - this a) gives you the security of having a percentage of your mortgage protected against interest rate increases and b) in the event of you wanting to reduce your mortgage by lump sum, you could reduce the variable element without penalty.

The percentages you place on fixed/variable will be a matter of personal choice.

Just something to consider....