Are Mortgage Interest Rates set to increase

van_beano

Hi folks,

Hopefully we have a clairvoyant lurching around and could advise on the best course of action here. All advise be greatly appreciated.

I am currently 18 months into a 5 year fixed term mortgage at 3.8%. I have added an extension to the house etc. and, without the benefit of a valuation report at the moment, the house would have an LTV of >50%-<80%.

I enquired from my bank as to what the penalty would be to break the fixed term and move to a LTV variable rate >50%-<80% at 3.3%. I was thinking it would be a couple of thousands at least as I am still very early into the fixed term. To my astonishment the breakage penalty cost was approx. €320 subject to a valuation report.

The savings would be approx. €70 per month so once the penalty and valuation report are paid I would be making these savings in about 8 months or so.

Can someone shed some light on why the breakage cost is so low since the bank have me on a fixed rate for another 42 months or so and would lose multiples of the breakage cost on interest payments?

I can only come up with 2 explanations:

1. I am not in arrears, all payments are on time and the house is not in negative equity. Are a lot of people switching and as such they want to keep their performing mortgages? or,
2. Interest rates are going to increase next year and the new LTV mortgage will be on par with my current fixed rate. So after about 8 months when I start making the savings it was all effort for nothing in the end?

Thanks for any help

BBMcQ

Unfortunately it's all just prediction, chit chat and hokum. Personally I see 2 quarter rate interests possibly in 2019, but not before Brexit is sorted so maybe 2020. France and Germany are starting to heat up but they will need to show the Eurozone area to have good growth versus the U.K.

Unfortunately you're basically asking for betting tips!