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Mortgage Advice

  • 09-04-2011 12:10pm
    #1
    the_viper2kie
    Registered Users, Registered Users 2 Posts: 204 ✭✭


    Hoping someone could help me out here re: new mortgage application.

    Applying for a ~260k euro mortgage for house which I am buying for 285k. I am wondering whether or not to fix (and for how long) versus variable or doing some split.

    With Bank of Ireland for example the five year fixed rates could be rising to close to 6% compared with the variable rate which may rise to close to 4%. (I haven't been able to see what exactly their new rates are since ECB rise just a press release saying they would be raising.)
    Am I right in thinking that you may be paying for some sort of premium to have it fixed. For the certainty of knowing what you will pay each month for the fixed term. This type of insurance/assurance would only actually pay off over 5 years if for example after 2.5 years the variable rate rises to 8%. Therefore paying 2.5 years at 4% and 8% for the last 2.5 years.
    Are there any predictive curves from economists that speculate where interest rates may go - I presume mortgage lenders use these curves to define their fixed rates. And are these available to the public.

    Anyone got any advice or thoughts on where interest rates may be going and what the best strategy is for someone in my position.


Comments

  • #2
    mari2222
    Registered Users, Registered Users 2 Posts: 568 ✭✭✭mari2222


    would you not rent for a couple of years? prices are only going one way. i read some economists think house prices go in a 30-year cycle.


  • #3
    robd
    Registered Users, Registered Users 2 Posts: 951 ✭✭✭robd


    mari2222 wrote: »
    would you not rent for a couple of years? prices are only going one way. i read some economists think house prices go in a 30-year cycle.

    Not what he asked.

    Seriously though OP, you question has be answered to death on here.
    Do a search. Here's the link to the search even.
    http://www.boards.ie/search/?q=interest+rates

    And yes they are going up and could potentially go up a lot.
    ECB raised rates this week from 1% to 1.25%. Last time they rose to 4.5%. That's about a normal rate. 1% is an emergency rate. If inflation gets carried away with itself (very likely given oil and commodity prices), it's perceivable that they could raise them to 6% or more. So a total of 5% rise. If you're buying factor current rate + 5% into you calculations and at least an average rate of current rate + 3.5%.


  • #4
    epad.ie
    Closed Accounts Posts: 7 ✭epad.ie


    Does anyone know if the banks are still lending?


  • #5
    silja
    Registered Users, Registered Users 2 Posts: 2,921 ✭✭✭silja


    epad.ie wrote: »
    Does anyone know if the banks are still lending?

    Yes, as long as you have a sizeable deposit and are in permanent employment.


  • #6
    lainey316
    Registered Users, Registered Users 2 Posts: 902 ✭✭✭lainey316


    silja wrote: »
    Yes, as long as you have a sizeable deposit and are in permanent employment.

    And no debt e.g. car loan - needs to be cleared first from that deposit.

    BoI suggested that with permanent employment and no debt, 92% is still on the table. I don't know if that only applies at a particular salary level.


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