Mortgage interest rates now

birdmccabe

Hi guys,
I am a single, 25 year old public servant. I acquired a mortgage in June to buy my first property. I opted for a variable mortgage at the time based on advise by my broker. However AIB have put up my mortgage twice in the past 3 months.
Considering this, I am wondering if anyone can advise me as to whether to stick with variable at this point or to fix it now to save against future increases. And if i were to fix should i go with the 5 year option or possibly a 2-3yr option?
Regards,
B

Liam D Ferguson

Nobody can predict what way the AIB Standard Variable Rate is going in the future. That's decided by a small group of people who manage AIB.

My opinion would be to stay with the variable rate but hedge your bets. If you could theoretically afford the repayments on the 5-year fixed rate, then set up a regular savings account paying the difference into it each month. If your variable rate repayment goes down, increase the savings. If your variable rate goes up, decrease the savings. If the variable rate repayment goes over today's 5-year fixed rate during the next 5 years, dip into your savings account to subsidise it. My gut feeling - and this is only speculation - is that you'll end up with money in the savings account at the end of five years.

jameshayes

I'm in a similar position, 2 increases in interest rates are scary but as the 2nd poster says, I'm of the thinking that in the long term a fixed rate will cost more than the variable. I'll be sticking variable for the time being and saving the extra for a rainy day / a day that the rate increases