To fix mortgage or not

montzarella

Hi there. The current fixed rate on my mortgage is ending and I have the following options:

2 year fixed at 4.65

3 year fixed at 4.95

Standard variable at 4.6

I'm with ulster bank and I'm thinking of just going for the standard variable. I had fixed rates for the past few years.

Anyone any thoughts on what rates might do in the future? I am financially stable, no missed payments or anything like that.

Hajduk

Hi Monzarella,

consider what is important to you. How tight is your budget? Calculate how much extra you would pay p.a. for the .35% difference between variable and fixed. Can you afford it? If so, would it be nice to have the certainty of a fixed amout over the next few years?

There has been talk of interest rate rises from Janet Yellen in the Fed. Also last week as UK Inflation figures were lower than expected, there was some discussion as to whether the base Bank of England rate there might now be allowed to rise.

Personally if I could afford it, I would fix - but I'm someone who likes security.

NOTE: I am not a financial advisor and all opinion given purely from a personal perspective.

Trish56

Hi Montzarella,
I don't think interest rates will fall any lower and for those on the variable rate the bank can increase the rate whenever they like. As the variable rate offered to you is 4.60% and the 2 year fixed is 4.65% I think it is a no brainer to fix for the two years. You have the security of knowing what your repayments will be for the next two years as more than likely rates will increase by then. There are lower rates available however this depends on the loan to value and you will incur costs to switch your mortgage.

I think go for the 2 year fixed at 4.65%.

montzarella wrote: »

Hi there. The current fixed rate on my mortgage is ending and I have the following options:

2 year fixed at 4.65

3 year fixed at 4.95

Standard variable at 4.6

I'm with ulster bank and I'm thinking of just going for the standard variable. I had fixed rates for the past few years.

Anyone any thoughts on what rates might do in the future? I am financially stable, no missed payments or anything like that.

jester77

Trish56 wrote: »

Hi Montzarella,
I don't think interest rates will fall any lower and for those on the variable rate the bank can increase the rate whenever they like. As the variable rate offered to you is 4.60% and the 2 year fixed is 4.65% I think it is a no brainer to fix for the two years. You have the security of knowing what your repayments will be for the next two years as more than likely rates will increase by then. There are lower rates available however this depends on the loan to value and you will incur costs to switch your mortgage.

I think go for the 2 year fixed at 4.65%.

2 years fixed at 4.65% sounds absolutely brutal and really taking the piss :eek:

Is there any way of shopping around or you tied now to that provider for the remainder of the mortgage?

Trish56

I don't understand how you say 2 year fixed rate of 4.65% rate is brutal when the variable rate is 4.60%. There are various loan to value rates available in the market however the OP will have to switch lender that will incur various fees of valuation fee and legal. The OP did not mention what the loan to value is so very hard to advice switching.

jester77 wrote: »

2 years fixed at 4.65% sounds absolutely brutal and really taking the piss :eek:

Is there any way of shopping around or you tied now to that provider for the remainder of the mortgage?

jester77

Trish56 wrote: »

I don't understand how you say 2 year fixed rate of 4.65% rate is brutal when the variable rate is 4.60%. There are various loan to value rates available in the market however the OP will have to switch lender that will incur various fees of valuation fee and legal. The OP did not mention what the loan to value is so very hard to advice switching.

ECB rate is at 0.25%. Here in Germany I fixed last year at 3.1% for 20 years and that was when ECB was at 0.75%.

4.65% for just 2 years is being seriously fleeced by that provider. There surely must be better value somewhere else for such a short term fixed rate.

peteb2

Correct me if I'm wrong but fixed rates have nothing to do with the ECB rate. No

Trish56

Fortunately for you, you are in Germany the OP is in Ireland and those that are on a variable rate mortgage have no protection from the ECB rate. Indeed if ECB rates goes up more than likely the variable rate will go up. Those on tracker mortgages are paying rates as low as 0.50% over ECB.

jester77 wrote: »

ECB rate is at 0.25%. Here in Germany I fixed last year at 3.1% for 20 years and that was when ECB was at 0.75%.

4.65% for just 2 years is being seriously fleeced by that provider. There surely must be better value somewhere else for such a short term fixed rate.

royster999

What terms for fixed rate mortgages do banks in Ireland usually give in terms of years ? I only see 5 years as the max..

Do banks always give the option to renew your mortgage at fixed rate when your initial fixed rate term is up?

Trish56

Bank of Ireland and ICS Building Society offer a 10 year fixed at nearly 7% for an existing customer. When your existing fixed rate expires usually the bank will send you out a list of fixed and variable rates available.

royster999 wrote: »

What terms for fixed rate mortgages do banks in Ireland usually give in terms of years ? I only see 5 years as the max..

Do banks always give the option to renew your mortgage at fixed rate when your initial fixed rate term is up?

royster999

How do the mortgage rates today (4-6% avg) compare to the last 30 years or so ?

It is my understanding that they are low now in comparison.

What do people forecast wrt mortgage rates ?

hfallada

royster999 wrote: »

How do the mortgage rates today (4-6% avg) compare to the last 30 years or so ?

It is my understanding that they are low now in comparison.

What do people forecast wrt mortgage rates ?

Interest rates were around 18-19% in the early 1990s in Ireland. It was mainly due to our high inflation rates.

Its impossible to predict interest rates. We did it in Economics in College. They asked the most experienced economists in the uk to predict rates for the next five years. None of them had the same view for the next five years and very few predicted it right. The bank of England cant predict rates.

But if inflation is low and domestic is low. There is no reason to increase rates. Only when inflation is above 2% does the ECB decide to consider a rate increase. Inflation in the Eurozone is constant or falling most months. Meaning there is no rate increase on the horizon for a long time. Plus the ECB was grilled for increasing rates a few years ago when there was a small increase in growth which caused inflation. But the rate increase killed growth. The ECB will probably not increase rates until inflation is around 3%. But with such a large amount of the EU unemployed, it will be a long time.

You could stay on a variable mortgage and then when there is talk of a rate increase, switch to a fixed mortgage. But since the Irish banks are using variable mortgages are a cash cow to compensate for their loss making trackers. A few increases in variable mortgages are very likely.

royster999

How easy is it to switch from a variable to a fixed?

fall

Any recent advice on this following the aib groups announcement of new fixed rates. I can fix for 3 or 5 years at 3.8 or 3.9%. Does anyone think these rates will drop further?

ChuckProphet

fall wrote: »

Any recent advice on this following the aib groups announcement of new fixed rates. I can fix for 3 or 5 years at 3.8 or 3.9%. Does anyone think these rates will drop further?

in the same boat but i'm not gonna fix. I expect rates to fall a bit further if they're offering them rates on fixed.

pajoguy

ChuckProphet wrote: »

in the same boat but i'm not gonna fix. I expect rates to fall a bit further if they're offering them rates on fixed.

I spoke to somebody in EBS and I asked why the fixed was so low compared to variable and the response I got was...shur they probably expect the rates to fall further I suppose.....
If they do fall its hard to see the SVR for AIB or EBS fall below 3.5%.
We are on 4.58 SVR at moment which is dropping to 4.33 in december but the 3.8 two year fixed is very tempting.

fall

exactly the same position with the Ebs. Anyone on the this forum that works in mortgages who give give some insight? 3.8 is very tempting

celticbhoy27

fall wrote: »

exactly the same position with the Ebs. Anyone on the this forum that works in mortgages who give give some insight? 3.8 is very tempting

Thinking of fixing for a year @ 3.5% currently on 4.29% can't see variable dropping .>.75% within the year??

Trish56

Just in case rates go up while you are in a fixed rate.... check with your lender before fixing what rates you will go back on - if its standard variable that will be a higher rate than a loan to value variable rate so it's important that you have the option of going on a loan to value variable rather than standard variable which is usually a good bit higher.

celticbhoy27

Trish56 wrote: »

Just in case rates go up while you are in a fixed rate.... check with your lender before fixing what rates you will go back on - if its standard variable that will be a higher rate than a loan to value variable rate so it's important that you have the option of going on a loan to value variable rather than standard variable which is usually a good bit higher.

I'm with AIB and they've discontinued the standard variable rate so would be going back to the ltv. Not sure if other banks still offer SVR however

Trish56

celticbhoy27 wrote: »

I'm with AIB and they've discontinued the standard variable rate so would be going back to the ltv. Not sure if other banks still offer SVR however

I think you will find that AIB has discontinued the standard variable rate for all new mortgages as they now offer loan to value rates however they still have the standard variable rate for existing customers and if you choose a fixed rate you will revert to standard variable rate which is currently 4.40%. See attached
http://personal.aib.ie/our-products/mortgages/mortgage-interest-rates.

celticbhoy27

Trish56 wrote: »

I think you will find that AIB has discontinued the standard variable rate for all new mortgages as they now offer loan to value rates however they still have the standard variable rate for existing customers and if you choose a fixed rate you will revert to standard variable rate which is currently 4.40%. See attached
http://personal.aib.ie/our-products/mortgages/mortgage-interest-rates.

I read that already but thanks for posting. Obviously have to seek clarity from the bank themselves but couldnt see how I could "revert" to something I was never on. I've been on LTV from the beginning

Trish56

celticbhoy27 wrote: »

I read that already but thanks for posting. Obviously have to seek clarity from the bank themselves but couldnt see how I could "revert" to something I was never on. I've been on LTV from the beginning

Be careful...as it specifically states on it's website that if you fix you will revert to a standard variable.

Heisenberg1

celticbhoy27 wrote: »

I read that already but thanks for posting. Obviously have to seek clarity from the bank themselves but couldnt see how I could "revert" to something I was never on. I've been on LTV from the beginning

I am with AIB too and I am on the LTV rate. Your original letter of offer states

the LTV rate when you started your mortgage and you will always go back to

that rate once the fix rate expires I have asked AIB to late me move to a different

LTV as my house has increased in value but they will not allow this.

braddun

3.8% is the new rate your paying too much

I would go for 15-30 year fixed rates



usa rates are going up next june expect others to follow,i would lock in long term fixed rate




Thu, Oct 30, 2014, 14:59


First published:Thu, Oct 30, 2014, 14:56












AIB, EBS and Haven are to reduce fixed and variable mortgage rates for new and existing customers.

This marks the first time that mortgage lenders have reduced variable rates in a number of years. The move will benefit at least 146,000 existing mortgage account holders in Ireland.

AIB Group said customers with a €200,000 mortgage will save up to €334 per annum, based on a 25 year term, under the revised rates.

The reductions include a 0.25 per cent decline in the standard variable rate for customers and the introduction of new lower Loan to Value (LTV) and fixed rates across AIB, EBS and Haven.
AIB Group is also introducing new fixed mortgage rates across all three brands. These include 3.80 per cent in respect of its three-year fixed rate and 3.90 per cent for its five year fixed-rate mortgages.

AIB and Haven are cutting all LTV mortgage rates by 0.24 per cent, while EBS is reducing all its LTV rates by 0.25 per cent. AIB and Haven customers with an LTV of 50 per cent or less will see their interest rate drop to 3.85 per cent, while EBS customers will see it fall to 3.80 per cent.
Revised variable rates come in to effect from December 1st with fixed rates to come into effect from 4 November, the group said.

fall

Think I am going to fix. Can't see the variable rate dropping below 3.8 in the space of a year. I can fix at this rate for two years. Fingers crossed I get this right

celticbhoy27

fall wrote: »

Think I am going to fix. Can't see the variable rate dropping below 3.8 in the space of a year. I can fix at this rate for two years. Fingers crossed I get this right

Would you not fix at the 3.5% for the year?

fall

I don't have that as an option. I am with the Ebs and the one year fixed is 4.15. Where is that rate available?

celticbhoy27

fall wrote: »

I don't have that as an option. I am with the Ebs and the one year fixed is 4.15. Where is that rate available?

Maybe I'm misreading something but aib have it down on their website as an option, would have thought EBS would have similar

fall

Just had a look, it is new business only so I am not eligible. Thanks anyway.

celticbhoy27

fall wrote: »

Just had a look, it is new business only so I am not eligible. Thanks anyway.

And thats what I was misreading didn't realise it was only new business

maniac2003

Aib fixed for 5 years at 3•9% is this too long to get tied in for?

Heisenberg1

maniac2003 wrote: »

Aib fixed for 5 years at 3•9% is this too long to get tied in for?

Hard to say rates may fall further nobody knows if your comfortable paying it then go for it. I went variable myself in the hope that they will drop again in the new year and the fixed rates my drop further.

Woodville56

I'd be inclined to go for the 1 year fixed at 3.5% and see how things look one year on, I doubt anyone can predict with any accuracy how rates will be faring in 3 years never mind five

Heisenberg1

Woodville56 wrote: »

I'd be inclined to go for the 1 year fixed at 3.5% and see how things look one year on, I doubt anyone can predict with any accuracy how rates will be faring in 3 years never mind five

That's the new business rate only not for existing mortgage holders.