10 year fixed at 4.99 %

FixdePitchmark

Lads,

Does 10 year fixed at 4.99 % - by BOI seem a good deal or even idea at this time.

I'm a lad who doesn't even know what a tracker is.

Thanks for any opinions

I am close to having 20 % of house price saved.

hfallada

ECB rates are not supposed to be raised for a good few years. There is no point fixing now as it's more expensive then variable. I would but with variable now and fix in about 3 years before rates rise

Eldarion

When you fix you're basically betting that the interest rate will go up. If rates don't go up you lose out due to the increased percentage/premium you paid to fix the rate.

You also lose the ability to easily make over payments. Personally, I'd recommend staying variable for another few years and only fix when the ECB starts making noises again.

FixdePitchmark

Eldarion wrote: »

When you fix you're basically betting that the interest rate will go up. If rates don't go up you lose out due to the increased percentage/premium you paid to fix the rate.

You also lose the ability to easily make over payments. Personally, I'd recommend staying variable for another few years and only fix when the ECB starts making noises again.

But can they not only go up at this stage - they are so low.

Would you ever get a lower fixed ?

jsd1004

FixdePitchmark wrote: »

But can they not only go up at this stage - they are so low.

Would you ever get a lower fixed ?

Possibly. If you think you are smarter than the bank and their advisors go fixed.

joeguevara

I think people are getting mixed up by variable and tracker. Variable rates are not totally linked to ecb rates. Banks can increase variable rates even if ecb rate stays the same or even decreased. The question is do you think the bank will increase variable above the 4.99. With disastrous interest rates they have to do something to increase profits.

bmm

Boi also has one of the highest fixed rates..

http://www.moneyguideireland.com/mortgages/5-year-fixed-rates

FixdePitchmark

joeguevara wrote: »

I think people are getting mixed up by variable and tracker. Variable rates are not totally linked to ebb rates. Banks can increase variable rates even if ebb rate stays the same or even decreased. The question is do you think the bank will increase variable above the 4.99. With disastrous interest rates they have to do something to increase profits.

Yes - know nothing about this, but.

If a recovery happens in Ireland - can they not just drift up.

A recovery will happen in Europe at some stage - UK on up.

I can't see it ever being lower ?

But what do I know.

FixdePitchmark

bmm wrote: »

Boi also has one of the highest fixed rates..

http://www.moneyguideireland.com/mortgages/5-year-fixed-rates

Thanks for that - but there is no 10 year.

For 10 year you are getting a long term protection - if things go mental

lau1247

FixdePitchmark wrote: »

Yes - know nothing about this, but.

If a recovery happens in Ireland - can they not just drift up.

A recovery will happen in Europe at some stage - UK on up.

I can't see it ever being lower ?

But what do I know.

Don't banks usually increase variable to make up the loss from the tracker because tracker shafts them so they have to shaft variables to get a 'balance' (Well for the past few years anyway)..?

So that said, interest rate is at all time low which mean it is unlikely to drop anymore and is more likely to go up if recovery happen. By then I would expect the tracker rates to go up and variable to go down (Down would be subjective and not guaranteed as it is up to the banks, as you know yourself it goes up quicker than coming down is the reality)

woodseb

hfallada wrote: »

ECB rates are not supposed to be raised for a good few years. There is no point fixing now as it's more expensive then variable. I would but with variable now and fix in about 3 years before rates rise

fixed will almost always be more expensive than variable, if you want long term certainty, it is not a bad time to fix, if you wait to fix in 3 years time when variable rates are higher you are going to fix at a much higher cost - really what you need to do is work out the over cost over the 10 year period

Eldarion

joeguevara wrote: »

I think people are getting mixed up by variable and tracker. Variable rates are not totally linked to ecb rates. Banks can increase variable rates even if ecb rate stays the same or even decreased. The question is do you think the bank will increase variable above the 4.99. With disastrous interest rates they have to do something to increase profits.

Just to expand on this one.

Yes banks can increase rates their variable rates at any time completely independent of the ECB rates but they are bound by market forces. If they increase their rates too much a competitor will come and eat their lunch.

If the ECB rate goes up, the banks costs go up which they will generally cover with a relative variable rate increase. Generally speaking all banks will do this together.

However, the flipside isn't necessarily true due to the trackers. When ECB rates went down we saw increases in bank's variable rates because they had to cover the reduced interest rate of those on trackers.

There's too many factors/variables in play here for people to say "Oh but they have to go up, they're so low!".

Fix if you anticipate an increase or just want peace of mind on your monthly outgoing figure and don't mind paying a premium. Stay variable if you want to overpay easily or anticipate a reduction.

El_Dangeroso

Eldarion wrote: »

Fix if you anticipate an increase or just want peace of mind on your monthly outgoing figure and don't mind paying a premium. Stay variable if you want to overpay easily or anticipate a reduction.

I like the idea of no variablity outgoings, but is it true you can't overpay on a fixed rate?

twerg_85

'Fixed' generally means that the € payment you make is fixed - so you pay an agreed amount for 10 years. Neither you, nor the bank can change the amount you pay.

If you want some flexibility along with some protection, you could split your mortgage 70% fixed, 30% variable for example.
On the variable part, both you (through overpaying) and the bank (through increasing the rate) can change the amount. On the fixed part, neither of you can change the amount paid.

Finally - all this talk about rates going up or down is slightly misleading, since of course the bank have factored this in to their rate. The 4.99% should be based on the bank's opinion on the average rate for the next 10 years plus an extra margin. They charge you this margin in return for giving you security (as they now have the risk of rates increasing).

Therefore, fixing is generally advised if you want less variation in payment (e.g. if you wouldn't be able to afford large increases) or if you think rates will be higher than the bank expects them to be .

Variable is generally advised if you want the cheapest expected payments and can handle the fluctuations.

All the above is personal opinion of course.

F.

Woodville56

Currently considering Variable v 3 yr Fixed Rate mortgage with AIB ( 4.29 % variable, 4.8% fixed) on a small mortgage over 15 yrs. The fixed rate works out at an additional €15.49/month or €558 over the 3 yrs fixed ( assuming variable rate remains as now ?) Worth the punt or maybe best to overpay the variable by same amount ?

quadrifoglio verde

FixdePitchmark wrote: »

Lads,

Does 10 year fixed at 4.99 % - by BOI seem a good deal or even idea at this time.

I'm a lad who doesn't even know what a tracker is.

Thanks for any opinions

I am close to having 20 % of house price saved.

Id fix simply for the peace of mind, especially over 10 years, of it was 3 years probably not but 10 years, that's a long time for an economy. Interest rates are at an all time low, something I've learnt about all time lows and highs is that they don't normally stay that way over the long term.
If inflation starts happening in Germany they'll start going up. What's the difference in cash between fixed and variable over the 10 years and I'd let that be the determination of whether or not you fix

hmmm

The only fixed rates I'd consider are long-term, 10 years at the minimum. With a fixed rate, you are essentially betting against a bank which has teams of people who spend their life trying to predict future interest rate movements - so you're unlikely to beat them over a short period other than by luck.

Over a longer period things can be more volatile, and I'd be thinking about historical averages and I'd worry as to how long rates can be at a record low.

The only reason I'd pick a short term fixed was if it was a small difference & I'd like the peace of mind.

It's a big decision either way (long term fixing) and everyone here is an amateur who isn't in a position to predict the future.

who_ru

quadrifoglio verde wrote: »

Id fix simply for the peace of mind, especially over 10 years, of it was 3 years probably not but 10 years, that's a long time for an economy. Interest rates are at an all time low, something I've learnt about all time lows and highs is that they don't normally stay that way over the long term.
If inflation starts happening in Germany they'll start going up. What's the difference in cash between fixed and variable over the 10 years and I'd let that be the determination of whether or not you fix

Trouble is the European economy is threatened by deflation not inflation. All across the EU, Germany included, the outlook is negative. Especially so for Italy & France, two of the biggest economies in the euro zone. The Germans are not in favour of any Fed or Bank of England style quantitive easing, or printing money.

But Irish banks are looking for investors and need profits, charges have gone through the roof so interest rates may go up here. Fixing is not a bad idea short term, but 10 years is a stretch and a lot can happen in a decade.

quadrifoglio verde

who_ru wrote: »

Trouble is the European economy is threatened by deflation not inflation. All across the EU, Germany included, the outlook is negative. Especially so for Italy & France, two of the biggest economies in the euro zone. The Germans are not in favour of any Fed or Bank of England style quantitive easing, or printing money.

But Irish banks are looking for investors and need profits, charges have gone through the roof so interest rates may go up here. Fixing is not a bad idea short term, but 10 years is a stretch and a lot can happen in a decade.

And that's exactly why I'd fix for the long term but go variable in the short. Chances are interest rates aren't going to rise over the next 12-18 months, however over the next 4-6 years I don't know what way they'll go.
Back in 2007 few saw the **** storm that was about to happen, the same could be said about ireland in 2012, few saw an economic recovery likely to happen in the near future. Now two years later, were growing.
What's to say that can't happen in Europe over the next 4-6 years. Growth generally brings inflation, high inflation brings interest hikes.

radharc

lau1247 wrote: »

So that said, interest rate is at all time low which mean it is unlikely to drop anymore and is more likely to go up if recovery happen. By then I would expect the tracker rates to go up and variable to go down (Down would be subjective and not guaranteed as it is up to the banks, as you know yourself it goes up quicker than coming down is the reality)

It is true that banks have increased variable rates in recent years in order to offset their tracker losses but it doesn't work both ways. If interest rates rise there is absolutely no chance of variable rates falling.