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Fixed interest rates

  • 24-12-2021 7:47am
    #1
    Moderators, Society & Culture Moderators Posts: 2,394 Mod ✭✭✭✭ K.G.


    Well,in view of inflation at the minute would it be a good time to fix interest rates at the moment or do ye think this inflation is temporary



Comments

  • Registered Users Posts: 8,122 ✭✭✭ Mooooo


    Have you gone looking for rates? The length of the term as well available, don't want to fix for too short or you'll be coming out at higher period possibly and have to go higher again



  • Moderators, Society & Culture Moderators Posts: 2,394 Mod ✭✭✭✭ K.G.


    Nothing yet,it's just inflation was never really something most of us have dealt with and if it doesn't level soon will have to be factored into decision s



  • Registered Users Posts: 8,122 ✭✭✭ Mooooo


    Asked the question of the BOI man at the Ifa webinar and he deftly avoided answering. Hard to know what way they'll go as they are charging negative rates on deposits over certain amounts



  • Registered Users Posts: 766 ✭✭✭ Tileman


    Don’t think they will ever be as low so it’s a good opportunity to fix and at least u know for certain what ure payments are. A couple of % can make some difference to paying off each month. The us and uk have both indicated rate increases for 2022.


    currently switching my mortgage to AIB green rate of 2.15% from bank of Ireland 3%. It’s a 5 year term. I’d go longer if the option was there at those rates. Started the process in September and still not over the line. Banks very slow with remote working and sheer volume of mortgages.


    have a land loan which I intend to try fix too in the new year but want to pay off a lump sum before I lock it in.



  • Registered Users Posts: 8,122 ✭✭✭ Mooooo


    Could you fix a percentage of it, allow the % not fixed then to have flexibility with over paying if required? Have a land loan here but may be looking to borrow again within the next 12 to 24 months which may require restructuring the lot.



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  • Registered Users Posts: 766 ✭✭✭ Tileman


    Not sure. I know you can with mortgage to have a split option. I haven’t looked into the options on the land loan yet.



  • Registered Users Posts: 10,808 ✭✭✭✭ Danzy


    It looks like lasting a bit longer than expected and after that a period of more normal inflation rather than the levels of the last decade.


    It will take a few years to iron out the global shortages, and deal with the wall of stimulus from the last 2 years and built up demand.


    Interest rates are on the floor and can only go up.


    Money will never be as cheap to borrow again.



  • Registered Users Posts: 2,645 ✭✭✭ yosemitesam1


    Flexibility might be more valuable than svaing a small percentage on interest.

    It wont take much of a rise in rates to drive the world into recession. One or two percent could be more than enough for that.

    Margins in farming might not rise with general inflation.



  • Moderators, Society & Culture Moderators Posts: 2,394 Mod ✭✭✭✭ K.G.


    It looks like we can fix for 10 years for just under .5 %over existing rate ,don't know about fees or charges. Anybody have opinions



  • Registered Users Posts: 10,808 ✭✭✭✭ Danzy


    Money has not been as cheap to borrow in centuries, probably ever.


    It can only go one way.


    Inflation will probably moderate but It might return normal rates.


    As things stand banks Govts etc effectively borrow for free, there are only so many years that can go on for.

    Look at bank of Ireland announcing a 2 yr pay deal, inflation can bed in bit by bit

    I'm looking at breaking my mortgage and refinancing so I'm betting it will be the right thing to do.


    You'd want to be working out lots of options and scenarios.



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  • Registered Users Posts: 10,808 ✭✭✭✭ Danzy


    Just saw this, the yanks are looking at maybe 5 rate rises this year,.25 of a percentage each time. Some on the Bank of England wanted a .5 rise in one go.


    Inflation this year will be at a minimum 5%. If Russia invade it will be More.



  • Registered Users Posts: 10,808 ✭✭✭✭ Danzy


    That is true, I did say to play around with scenarios Which was a roundabout way of saying each story is different. Especially if it is a dairy operation.


    Maybe if it was sizable the could split. Maybe that doesn't apply to farm loans.


    Though I can't see any scenario where borrowed money remains effectively free. If the ECB rate remains as is for years to come, we have bigger problems than a recession.



  • Registered Users Posts: 4,294 ✭✭✭ alps


    That depends on the rate you're coming out of.

    Makes perfect sense to fix at 4% insead of variale 3.5%, but tougher call if your loans are a bit more aged and may be at 1/1.5%



  • Registered Users Posts: 8,122 ✭✭✭ Mooooo


    Once you don't think you'll be needing to refinance to add new borrowings down the line it may make sense. Is that from existing bank or have you priced around?



  • Registered Users Posts: 14,268 ✭✭✭✭ Bass Reeves


    What rate are you paying. It would depend on the amount borrowed as well. If you have 2-300k a d 15+years left I would seriously consider it. As interest rates rise some banks may cut there margin. The margins on 2-7 year lending ( sub 100 k) in Ireland is crazy rates of 5-8% are quoted.

    With virtual negative interest rates small loan rates of this pricing is crazy. You should be able to borrow at 3-4%.

    Longterm commercial lending rates in Ireland are 1-1.5% above European norms. It was similar with mortgages but the arrival of a few lenders such as Avant money has pushed rates down 1%.

    Slava Ukrainii



  • Moderators, Society & Culture Moderators Posts: 2,394 Mod ✭✭✭✭ K.G.


    Currently 2.91,6 years into the mortgage and under 50 %loan to value.on the banks website 3.5 % is available .haven't approached bank yet.they one thing that I'm afraid of is the loss of flexibility. I approach the loan account as potential short term finance -we are a head of schedule and look at this money as being available is thes##t hits the fan.in other words if I have a bad year I'm ahead enough to skip a year before I have to find payments again and in the mean time I m getting 2.9 % on that money.



  • Registered Users Posts: 4,294 ✭✭✭ alps


    The fertiliser should probably should have thought us a lesson.



  • Registered Users Posts: 14,268 ✭✭✭✭ Bass Reeves


    I expect interest rates to rise. However it will probably be the end of the year. Assuming that it takes 3 hikes to teach above 3.5% will that be early next year. Even assuming they continue to rise it will be early to mid 2024 before you are starting to make money on a fixed over variable rate. Will you he rate continue to climb to justify the change. On a 100k loan 1% differential in a loan is 1k or about 500 euro after the higher marginal rate of tax.

    If it's a 2-300+k loan then them the option may seem more attractive below 100k you would be inclined to let it continue as is

    Slava Ukrainii



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