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Interest Rates - Where will they go?

  • 12-09-2022 12:54pm
    Moderators, Science, Health & Environment Moderators Posts: 23,180 Mod ✭✭✭✭

    Coming to an end of a 3 year fixed rate. Going to look into another fixed rate.

    As I understand it, the ECB will raise rates to c. 4% and bring it back to 2% over the next 24 months. `Fixing at 3 years for 2.45% or 5 years at 2.6% seem the best value.

    Any thoughts?


  • Registered Users Posts: 1,040 ✭✭✭JohnnyChimpo

    I'd fix at 5 years at the moment, go to the Mortgage forums over at AskAboutMoney to get many threads discussing this topic to death, no-one knows for sure but 2.6% looks very appealing for the medium-term.

  • Registered Users Posts: 594 ✭✭✭famagusta

    We fixed for 10 years last month, 2.6% i think, with Ulster Bank. Its nice to have stability for the long term...

  • Registered Users Posts: 409 ✭✭WealthyB

    What makes you think the ECB go to 4% and then back to 2%? and even if so, what makes you think Irish banks would quickly pass any ECB rate reductions back on to the 350k+ SVR mortgage holders?

  • Registered Users Posts: 3,202 ✭✭✭cruizer101

    Went with a 5 year fix 2.2 myself, was torn between it and a 10 year 2.9.

    No one know where rates will be in 5 years so figured I may aswell take the extra money for myself, if they were close enough I might have gone 10

  • Registered Users Posts: 6,024 ✭✭✭Claw Hammer

    Fix as soon as you can for as long as you can!

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  • Registered Users Posts: 2,968 ✭✭✭KilOit

    Banks are going to clean up, all these 300 thousand tracker mortgages are going to be fixing. think it'll go up a bit more but come back down in 4-5 years so wouldn't be inclined to be fixing above 3%

    I'm still 3 years left on 2.2, happy enough with that, lump sum to throw onto it at the end to take the sting out of the increased rate

  • Registered Users Posts: 6,267 ✭✭✭touts

    This has a feeling of 2006/2007 at the moment. Central banks raising interest rates when the world's economy already looks to be in recession.

    The only thing the ECB can do is raise interest rates and when the only tool you have is a hammer every problem looks like a nail. They will drive up interest rates and kill the economy. Now at 1.25. They have said 5 more rises likely. 0.5 each which would bring it to 3.75. My feeling is they will get no more than two or three rises in before the German economy slams into the ground and Lagarde is quitely told to either reverse or she will be replaced by someone who will.

    It will be back close to 2% or lower by the end of 2023 as recession threatens to become depression.

  • Registered Users Posts: 6,024 ✭✭✭Claw Hammer

    The Germans hate inflation more than anything since the weimar Republic. Interest rates will stay up until inflation stops, come hell of high water.

  • Registered Users Posts: 3,096 ✭✭✭Browney7

    Five year euro swap rate at 2.4ish and the curve is fairly flat after that. 1 year swap rate at 2.1% so Market looks to be pricing on the ECB getting to 2.5% or 3% and getting there quickly from the current 0.75% rate.

    So if a non bank lender (Avant, finance Ireland etc) needs to make 2% margin on the risk free rate then rates charged to customers could get to 4 or 5% in the next 12 months. These lenders aren't dominant in the market (and Finance Ireland is part owned by the NTMA so real politik may come into their rates) so whatever BOI and AIB can get away with paying in deposits will influence what they charge customers for mortgages (whilst acknowledging this is likely too simplistic as it ignores the risk of the mismatch between deposits being liquid and loans being illiquid).

    Finance Ireland's 20 year rate at 3% for less than 60% LTV looks interesting for anyone who places a value on certainty (if it's available after any delay in underwriting! Also fairly sure they are quite generous on early repayment terms/penalties)

  • Registered Users Posts: 665 ✭✭✭houseyhouse

    Is this with BOI? If so, can I ask why you chose that rate? I’m also coming to the end of a fixed period and I’ve an application in with BOI but when I compare the cost of the ‘high value’ 5 year mortgage at 2.2% and the regular at 3% but including 3% cash back, the regular costs less overall.

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  • Registered Users Posts: 3,202 ✭✭✭cruizer101

    No just with ulster bank. I'm with them already so just refixing. They aren't taking new applications

  • Moderators, Science, Health & Environment Moderators Posts: 23,180 Mod ✭✭✭✭godtabh

    Applied for the 5 year fixed at 2.65%

  • Registered Users Posts: 728 ✭✭✭ergo

    Just bumping to see what updated thoughts are

    Coming to end of fixed term with BOI, 1% lump sum due so couldn't jump out of it sooner

    66% left to pay on mortgage

    BOI have offered 2.9% fix for 1 or 2 years or 3% for 3 to 5 years. I know these much poorer than rates people getting earlier in year but different landscape now. Do people think these high rates will be around for a few years or potentially 5 to 10? And how high do people think they might go...? I know it's impossible to be confident about these predictions but interested to hear more thoughts

  • Registered Users Posts: 404 ✭✭Kurooi

    Personally I'd take a 5 year fix.

    Nobody can tell where interest rates are going, regular people making predictions on that are kidding themselves. They're not financially savvy, they're gambling.

  • Registered Users Posts: 22 JayWasTaken

    Just refixed with ulsterbank at 2.2% for 5 years. Was also offered 10 years at 2.95%.

    Was torn between them but way I see it if the banks think they can make a profit on 2.95% on the 10 year hopefully the rates won’t be mad after the 5 years are up. It’s a difference of €6000 over the 5 years so may as well take the lower rate I know now.

    I was in the middle of a fixed term already but my breakage fee was €0. So if you are in a fixed mortgage might be worth seeing if you can refix early while rates are still low.

  • Registered Users Posts: 17,886 ✭✭✭✭Donald Trump

    You won't "beat" the market in the sense of banks letting you lock in a rate below what they expect it to cost over the term. That is not to say that one decision won't end up being a lot more beneficial than the other.

    What you are doing is locking in certainty for yourself.

  • Registered Users Posts: 3,096 ✭✭✭Browney7

    5 year EUR swap rate is now at 3.1% ish and forecast to get there pretty quick (shorter durations are near 3% too). Irish ten year bond yield was trading at 2.9% today (one year ago it was near 0%) and the five year was 2.4%. If banks want to make a 1.5% to 2% margin on top of "market" rates then 4% to 5% rates for five year money should be with us soon but the level of deposits may negate the need to raise rates a bit.

    The ECB seem to think the top of the rate cycle will see a rate of 2.25% to bring the inflation genie back in the bottle - the market doesn't believe them.