SVR higher than fixed?

fricatus

We're coming off a fixed rate with BOI, and now we've got a letter offering the following mortgage rates:

2-year fixed: 4.35%
SVR: 4.5%

Is it unusual that the fixed rate is lower than the SVR? I would have thought the SVR would normally be lower, to make up for the fact that it could either rise or fall over the coming two years.

ted1

fricatus wrote: »

We're coming off a fixed rate with BOI, and now we've got a letter offering the following mortgage rates:

2-year fixed: 4.35%
SVR: 4.5%

Is it unusual that the fixed rate is lower than the SVR? I would have thought the SVR would normally be lower, to make up for the fact that it could either rise or fall over the coming two years.

Considering AIB are doing 3 year fixed at 3.8 and 5 tear fixed at 3.9.

I'd look at changing to them or else hold off for a month or three and hope BOI follow them

Villa05

Listen to what Patrick Honohan had to say on the subject yesterday

P. Breathnach

The quote indicates that the bank believes that the SVR is likely to fall in the short term. I'd guess that their reading of the market situation is that SVR will be about 4% in a few months' time.

So do you want to gamble? In effect, that is what the bank are inviting you to do. Whichever you choose, you are making a bet that it will be the cheaper financing for you.

I'm not a gambler by inclination but, if I were in your position, I'd choose the SVR and expect the rate to fall in the short term (and kick myself if I found I had made the wrong choice!).

PokeHerKing

Anyone any ideas on the cost of breaking your fixed term? We're fixed for 2 years on our first home/mortgage since July. Originally wanted as much $$$ as we could get so went with PTSB but their rate of 4.45 is looking shocking right now.

We fixed for security and because things where looking UPUPUP when we bought but we ended up draing down a much smaller mortgage thankfully so should have went to a more competitive provider but didnt.

Ive sent an email off to our Broker looking into this but figured someone on here could probably answer it quicker!

Cheers

L1011

I got the same offer a few months ago, before the AIB drop. Took the fixed as the SVR would have been an increase on my old fixed.

If they drop the SVR before halfway through, or more than once (assuming the normal .25% changes) I'll lose out slightly but luckily is a very small mortgage anyway and ovet half the payment is capital anyway

fricatus

Thanks all for the replies... everything points to the rates going down, so I might just risk it for a biscuit. Now to try and convince my better half! :pac: