Phone call from Bank Manager!

Filmer Paradise

Hi All

Got a phone call out of the blue from my mortgage provider during the week.

Long story short. I'm on a variable at 3.7%. He's offering to fix me for 3 years on 3.1%.

Is this a good deal? Should I bargain him down a bit or should I stay on a variable for now?

I'm half way through a 30 year term & know Zip about these matters.

Thanks in advance for any advise on this.

pajoguy

Filmer Paradise wrote: »

Hi All

Got a phone call out of the blue from my mortgage provider during the week.

Long story short. I'm on a variable at 3.7%. He's offering to fix me for 3 years on 3.1%.

Is this a good deal? Should I bargain him down a bit or should I stay on a variable for now?

I'm half way through a 30 year term & know Zip about these matters.

Thanks in advance for any advise on this.

What bank are you with. Is it EBS?
We fixed for 1 year at 3.15 down from 3.7 SVR. It was the same rate for 1,2 or 3 years.

P. Breathnach

Start with the reasonable suspicion that the bank sees some gain for itself in the proposal.

They expect that variable rates will rise in the short to medium term, and are offering you an inducement to get you on to a variable rate in the medium term.

They are inviting you to speculate on future interest rates. That's a game I wouldn't play, particularly as I suspect that rates will indeed rise.

RobbieTheRobber

P. Breathnach wrote: »

Start with the reasonable suspicion that the bank sees some gain for itself in the proposal.

They expect that variable rates will rise in the short to medium term, and are offering you an inducement to get you on to a variable rate in the medium term.

They are inviting you to speculate on future interest rates. That's a game I wouldn't play, particularly as I suspect that rates will indeed rise.

Bank is offering to move the OP from a variable to a fixed.
Possibly just customer retention efforts by the bank in question, considering all the switching offers about and 3% fixed for ten years offers available currently.

Delta2113

Get everything in writing if you do decide to switch.

RobbieTheRobber

Filmer Paradise wrote: »

Hi All

Got a phone call out of the blue from my mortgage provider during the week.

Long story short. I'm on a variable at 3.7%. He's offering to fix me for 3 years on 3.1%.

Is this a good deal? Should I bargain him down a bit or should I stay on a variable for now?

I'm half way through a 30 year term & know Zip about these matters.

Thanks in advance for any advise on this.

Other banks are offering 3% fixed for up to ten years currently.
There are also incentives being offered to switch mortgage providers by various banks.
However if you have no interest in switching and the additional savings available then yes I would suggest accepting your banks offer to fix and taking the savings. After your fixed period is over you will then go back on the banks variable rate.

I'm sure most people would agree variable rates in ireland are not likely to drop below the 3.1% you are being offered for a fixed rate in the near future.

Sleeper12

Interest rates are at their lowest ever. They will only go up. Fixing on a lower rate seems like a bargain to me. I'd jump on the deal

steamsey

A reasonable default position here is to be massively skeptical that the bank called you out of the blue to offer you something. They are not interested in helping you BUT there is the slight chance that notwithstanding this - the deal might be of benefit to you. No one knows where interest rates will go.

If it were me, I'd frankly ask why they were offering me this and see if they have a good answer.

You might be able to do better than 3.7% variable by looking at your LTV and seeing if current bank or others are offering better rates - they won't automatically switch you down to a better variable when your LTV drops down to a new threshold - you have to get house re-valued (€120 ish) and apply but it can be well worth it.

B-D-P--

steamsey wrote: »

If it were me, I'd frankly ask why they were offering me this and see if they have a good answer.

Answer A: (the lie) We appreciate your customs and we are always looking out for your needs we would like to offer you this great deal where you save and we lose out.

Answer B: (The untold truth) We foresee that interest rates may drop in the next year and want to lock you in for 3 years during the unpredictable period of Irish economy growth.

Which do you really think she/he's going to be told?

_Brian

I’ve no real advice except:

When he took to time to ring you there is some advantage to the bank on moving you to this new rate.

GingerLily

_Brian wrote: »

I’ve no real advice except:

When he took to time to ring you there is some advantage to the bank on moving you to this new rate.

The bank want him to fix with them rather then switch bank. The banks are worried about retention.

henryd65

Ask for the APRC for the variable and fixed rates. The difference may not be as great as it seems.

Henry Ford III

As always - fix for certainty, not for potential profit.

Whilst rates are at historical lows the margins are still relatively high for the banks. Fixing will give them certainty also. Beware redemption costs if you try and get out early too.

Rates will probably increase at some point, but it'll be nothing huge - price stability is important to the people in control.

draiochtanois

This post has been deleted.

brownbinman

If you're half way through your mortgage, your loan to value might be much lower.

Shop around, other banks might offer even lower (say 2.6% over 3 years with Ulster) if your LTV is under 50-60% I think it is

You owe the bank nothing and could take years off your mortgage if you continue paying the same amount but at a lower interest rate

cruizer101

There is a good comparison tool here, will depend on what your LTV is now but if they are ringing there is a chance you can bargain, maybe try get lower or longer fix, the general consensus seems to be rates are going to go, bar some sort of community bank model being introduced which is unlikely

https://www.ccpc.ie/consumers/financial-comparisons/mortgage-comparisons/

lau1247

A brief caveat that I noted from Haven a while ago, not sure if this applies to other bank (probably do) but you may want to read up on your lender's terms and conditions.

In this example if you are on LTV to Fixed, when it finished, you will not go back to LTV, but instead to SVR which would be higher.

wrote:

When you are considering your interest rate options, it is important to consider the overall cost of
the loan over the full term of the mortgage rather than just what you are paying at a particular point
in time. For example, if you were to switch from an LTV variable interest rate to a fixed interest rate
and the fixed interest rate period expires, it is important to be aware that the new variable interest
rate you will then move to (i.e. an SVR) may be higher than the LTV variable interest rate you were
originally on. The effect of this is that your new loan repayment after the fixed interest rate period
may be higher than your original repayments, which could result in you paying more in total over the
term of your loan compared to what you would pay if you had not switched to a fixed rate

draiochtanois

This post has been deleted.

lau1247

draiochtanois wrote: »

This post has been deleted.

Yes but there is a difference between the LTV type variable and SVR variable!

i.e. if I sign up now per LTV and you sign up per SVR, we will be paying different variable rates. That was my understanding of it.

wrote:

it is important to be aware that the new variable interest
rate you will then move to (i.e. an SVR) may be higher than the LTV variable interest rate you were
originally on.

coylemj

This does sound like a scheme to retain (as opposed to screw) the customer. Interest rates can only go up in the near to medium term, the UK and US will increase earlier than the Euro zone but the trend is up, no question about it. Dropping a variable rate by 0.6% to fix it for three years sounds like a good deal to me.

But as others have said, shop around because if you're on a variable, you are a free agent and there shouldn't be any penalty for moving. You may have some legal costs but you can weigh the costs of moving against the financial benefit over a few years. Ask any prospective new lender if they can help with the legal fees.

Filmer Paradise

Wow. Thanks for all the replies.

This is an area where I could easily 'get lost in my own museum'.:D

I've a much better handle on this now.

So, it seems the bank are offering me an okay deal in order to keep my apparently valuble custom. Right?

Normally, I'd be fairly skeptical of anything to do what banks offer.

In this case though, I spose it'd be no harm to go in for a chat & see if I can get a lower rate in exchange for a year or three extra staying in a fixed.

Any ideas on the lowest rates available currently?

Also if anybody else has any other thoughts to throw into the pot, it would be most welcome.

Thanks again.:)

robocode

lau1247 wrote: »

A brief caveat that I noted from Haven a while ago, not sure if this applies to other bank (probably do) but you may want to read up on your lender's terms and conditions.

In this example if you are on LTV to Fixed, when it finished, you will not go back to LTV, but instead to SVR which would be higher.

Looking at my recent letter from BOI (my 1 year fixed expiring soon), I only see LTV, no sign of any reference to SVR. I can't find anything about SVR on their site either, am I missing something fine print? (sorry to hijack thread)

brownbinman

I'm on 2.99% on 3 year fixed, got €1500 for legal fees which more or less covered it.

BUT, my LTV is around 80%, much higher than your amount would be

lau1247

robocode wrote: »

Looking at my recent letter from BOI (my 1 year fixed expiring soon), I only see LTV, no sign of any reference to SVR. I can't find anything about SVR on their site either, am I missing something fine print? (sorry to hijack thread)

to be honest I'm not sure either. I'm just starting to getting on the property end myself. It was just something I noted (As you may have guessed I'm approved with Haven).

Maybe best to give your bank a call and ask?? They would be in a better position you answer.

coylemj

To fix or not?

Article by Conor Brophy on RTE Business website, posted or last updated today (Feb. 17th) ......

Variable rate customers have some thinking to do

Jim2007

P. Breathnach wrote: »

That's a game I wouldn't play, particularly as I suspect that rates will indeed rise.

Right so you have the OP continue to a higher variable rate than is offered on the fixed option and then continue to pay the high rate there after in any case..

So how exactly does having the OP pay the higher rate during the initial period help them???

Jim2007

Sleeper12 wrote: »

Interest rates are at their lowest ever. They will only go up.

We expect so, but nothing is ever sure in finance. It Switzerland right now we have negative rates in some cases. Many local government officers are discoursing people from pay taxes etc. early because they (the local government) will be obliged to pay the banks interest.

kala85

brownbinman wrote: »

I'm on 2.99% on 3 year fixed, got €1500 for legal fees which more or less covered it.

BUT, my LTV is around 80%, much higher than your amount would be

What bank did you get that from

brownbinman

kala85 wrote: »

What bank did you get that from

Ulster Bank

draiochtanois

This post has been deleted.

JDD

BOI are offering 3% fixed for five years to new customers. I'd at least bargain them down to that.

Pay very close attention to penalties for breaking out of your fixed rate during your fixed period.

Pay very close attention to the name of the rate they will put you on at the end of the fixed period.

Otherwise I would say fix. I expect variable interest rates to go up in line with ECB increases. The 3.1% he's offering probably wasn't available until you got under a certain LTV.

draiochtanois

This post has been deleted.

Paulmee

I have just switched to a fixed rate for 3 years with UB(2.99, loyalty rate and 60-80% LTV)
I had been on a 3.3 variable rate and before that a 4.3 variable rate(when I was in negative equity)
A fixed rate of around 3 is good, plus it gives me some stability, considering I was paying 4.7 a few years ago!!