3 Year Fixed rate of 3.20%~ good move?

Bleating Lamb

Currently have Variable rate mortgage at 3.15% with AIB bank.
Am thinking of fixing the mortgage for a 3 year period.AIB are currently offering 3 year fixed rate of 3.20%.
Am halfway through a 20 year mortgage.
Overall market sentiment seems to be that cost of mortgages may well begin to rise slightly next year....that’s only based on my very much uninformed occasional reading of business section of the Indo:)

Looking at business section of Irish Independent last week Charley Weston was commenting that the Govt are coming under real pressure to encourage the main lenders to lower the interest rates further to customers.
Maybe I was reading it wrong though as it seemed to be looking to lower it for first time buyers rather than all customers.

I appreciate it is like asking people to look into a crystal ball....but given current World wide trends,the whole impact of Brexit etc.....can people see interest rates drop in next few months for all mortgage holders?....not just new clients to banks.
Would hate to fix the mortgage this week and then see a rate drop in a month or two:)

Main reason to fix mortgage would be to be able to budget better for the household by knowing mortgage amount was the same for next 3 years.

Thanks for any opinions/replies in next few days.

Heres Johnny

First of all of you are that far through your mortgage you should definitely be below a LTV threshold which will give you a lower variable rate.
I am less than 80% LTV and pay 2.95% variable with AIB. You could be even below 50% and get an even better rate.

As for the fixed v variable, it's your call really. Nobody knows where interest rates are going or when. Personal choice really.

Bleating Lamb

Heres Johnny wrote: »

First of all of you are that far through your mortgage you should definitely be below a LTV threshold which will give you a lower variable rate.
I am less than 80% LTV and pay 2.95% variable with AIB. You could be even below 50% and get an even better rate.

As for the fixed v variable, it's your call really. Nobody knows where interest rates are going or when. Personal choice really.

Checked with the OH there,we are 9 years into mortgage....got a letter from AIB a few months back offering those LTV variable rates alright but I didn’t like the fact there is a condition attached that you can only choose that option once during the lifetime of the mortgage......am veering towards fixing for 3 years.Was just hoping some people who work with mortgages,banking,money markets etc would be regular visitors to this forum on boards and might have a better idea than likes of myself of what is likelihood that interest rates for all Mortgage customers both long term,pre-existing and first time buyers will see interest rates cut in wake of political pressure from the Govt over the next few months.

Again thanks for any replies/opinions.

CeilingFly

It's the ltv that can be chosen once - so if you are 60% today, you can't request a 50% ltv rate next year even if you paid off a lump sum.

But you could move from ltv to fixed at any time and then back to the ltv you had before the fixed rate started

Bleating Lamb

Friday afternoon prob not best timing to post this:).....thinking of sending off letter to fix the mortgage for 3 years at 3.20% with AIB on Monday.....

Appreciate any opinions or answers from people who work in Financial Markets/Banking area etc on two quick questions
1- as reported in recent media how likely are Govt to put real pressure on the major Irish banks to lower interest rates in next few months?.....or is that wishful thinking.
2- concensus across European markets for last year or so seems to be that interest rates will start to increase gradually in 2019....is that a correct summation of what might happen or has Brexit a likelihood to affect rates at all.

Really appreciate any opinions ...however brief, thanks.

Heres Johnny

We don't really know. Pressure on banks to drop interest rates is unlikely. They're not in great shape financially and a market like Ireland is risky to lend in. I'm an actuary for an insurance company on the investment and pensions end of the company. We have a global property fund to invest in for people, we will not touch Irish property. Far too volatile.
As for base rates increasing, yeah it will happen sometime but nobody knows when. As long as there is political turmoil in Europe, I think the economies will need to be stimulated with low interest rates.
I'm not going to tell you to fix or not though, that's your call.

Bleating Lamb

Heres Johnny wrote: »

We don't really know. Pressure on banks to drop interest rates is unlikely. They're not in great shape financially and a market like Ireland is risky to lend in. I'm an actuary for an insurance company on the investment and pensions end of the company. We have a global property fund to invest in for people, we will not touch Irish property. Far too volatile.
As for base rates increasing, yeah it will happen sometime but nobody knows when. As long as there is political turmoil in Europe, I think the economies will need to be stimulated with low interest rates.
I'm not going to tell you to fix or not though, that's your call.

Thanks for the feedback...I’m not expecting people to say whether I should fix or not....but to give a considered opinion on current and possible future conditions as regards interest rates.You have done this very well and obviously are coming from s great base of knowledge from your work occupation.

Thanks again for your excellent response and looking forward to anyone else giving their views over the weekend or early next week.

Heres Johnny

My take on fixing is this....because there's so many unknowns it comes down to your risk profile.
If you're a very conservative person and wouldn't ever invest in a risky or volatile fund then I'd fix. If an increase in rates annoyed you more than a decrease would make you happy then I'd also fix.
For what it's worth mine is variable rate at 2.95%, I like the idea of overpaying from time to time and possibly increasingly so if I see income increases in the future, as my monthly payment is a fixed amount from now until 2040!!

AndrewJRenko

Do you really need to fix? Will your lifestyle be impacted significantly if your variable repayments were to go up by e100 or e200 per month? If not, I wouldn't be in any rush.

If your bank has offered you the fix deal, it's a fair bet that they've worked out that they will probably earn more margin from you on the fix deal than variable. They're the experts, and you probably won't beat the bank.

Unless you really need the security of a fixed repayment, I wouldn't be in a mad rush to fix.

CeilingFly

Rates will never come down to average European levels because of the costs and time involved in repossession if someone stops paying.

All those costs are paid by all the other mortgage holders. So next time you hear some leftist shinner whining about banks repossessing property, remember YOU are paying for that non payer in higher mortgage rates.

As for rates moving - nothing will happen in next few months.

Bleating Lamb

AndrewJRenko wrote: »

Do you really need to fix? Will your lifestyle be impacted significantly if your variable repayments were to go up by e100 or e200 per month? If not, I wouldn't be in any rush.

If your bank has offered you the fix deal, it's a fair bet that they've worked out that they will probably earn more margin from you on the fix deal than variable. They're the experts, and you probably won't beat the bank.

Unless you really need the security of a fixed repayment, I wouldn't be in a mad rush to fix.

Not under pressure to fix....don’t work in financial area but read business part of paper weekly,had a few shares previously,so my reading of market sentiment was that say this time next year interest rates will have to have gone up slightly.....of course that could be wrong... to avail of one of the LTV variable interest deals that AIB are offering you have to get your house valued which would cost a minimum of 150 euro by an approved value.Was thinking of saving on the 150 euro and going with the fixed...now to be fair to AIB they are not doing a hard sell on either the fixed or LTV options.....just sent out a generic letter a few months back showing current rates they are offering.

Like many parts of the country house prices have risen. Slightly in my area (NW) and O suppose that would affect the LTV deal I could go for if I didn’t go for fixed option.