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Lock in mortgage rates???

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  • 04-08-2006 12:39am
    #1
    dochasach
    Registered Users Posts: 180 ✭✭


    Adjustable Rate Mortgages (ARMs) make great sense when interest rates are falling, but it's obvious that interest rates aren't falling anymore. Is anyone considering locking in a long term rate or are most mortgage holders already past the point of no return?

    Here is an interesting article about the damage ARM resets are causing in another properous nation:
    http://www.marketwatch.com/news/story/story.aspx?guid=%7BCF2EE1B6-9B14-4D99-9F53-B49CB2429025%7D
    Chuck Jaffe, MarketWatch wrote:

    BOSTON (MarketWatch) -- It is becoming increasingly obvious that financial advisers, real estate experts and parents will someday point to what is happening in the mortgage market today and use it as a cautionary tale of what can go wrong when a buyer stretches to get too much house during a market that seems invincible.


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    #2
    Idleater
    Registered Users Posts: 6,236 ✭✭✭Idleater


    I've always gone fixed. I prefered to pay for the "security" of knowing exactly how much I would be paying out each month.

    I agree that Variable Rates make sense when rates are falling but since we have been at "historic low interest rates" since I bought, I figured they would only go up and indeed they have.

    L.


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    #3
    loyatemu
    Registered Users Posts: 14,787 ✭✭✭✭loyatemu


    it's a gamble - generally the banks have a better idea whats going to happen than you or I, and they will pitch the fixed rates to make themselves the maximum amount of money.


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    #4
    dochasach
    Registered Users Posts: 180 ✭✭dochasach


    loyatemu wrote:
    it's a gamble - generally the banks have a better idea whats going to happen than you or I, and they will pitch the fixed rates to make themselves the maximum amount of money.

    Of course, just as they've been pitching variable rate loans and talking up property prices to make themselves the maximum amount of money.

    Banks are in the position where they freely choose long-term or short-term rates for themselves. BOI, AIB and Barclays recently sold real-estate assets to make cash available. If you were a bank and you suspected rates were going to rise (a no-brainer prognostication for anyone with a clue as to what is happening with the global economy), wouldn't you lock in the long-term rate for yourself while trying to convince your customers to go with a variable rate?


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    #5
    Baby4
    Closed Accounts Posts: 1,407 ✭✭✭Baby4


    This post has been deleted.


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    #6
    Cantab.
    Closed Accounts Posts: 1,444 ✭✭✭Cantab.


    Baby4 wrote:
    This post has been deleted.

    Oh that's very interesting. Why is that I wonder? The banks beginning to be a bit more pessimistic?


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    #7
    Idleater
    Registered Users Posts: 6,236 ✭✭✭Idleater


    Cantab. wrote:
    Oh that's very interesting. Why is that I wonder? The banks beginning to be a bit more pessimistic?

    Your post has absolutely nothing to provide to the topic at hand.

    Is rent fixed or variable???


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    #8
    dochasach
    Registered Users Posts: 180 ✭✭dochasach


    nereid wrote:
    Is rent fixed or variable???

    Rent is variable, it is nowhere near historic lows, it peaked around 2002 in Ireland and continues falling nationwide everwhere except Dublin, where it is only falling in inflation adjusted euros.

    ARM interest is variable, it is tied to the ECB rate which bottomed out within the past two years and is rising from this historic low:
    http://www.economist.com/research/backgrounders/displaystory.cfm?story_id=4174785


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    #9
    Bluehair
    Registered Users Posts: 1,336 ✭✭✭Bluehair


    At this point fixing for anything less than 5 years is a mugs game, you'd be better off with a tracker. Frankly i'd suggest fixing for 10 years would provide a certain security given the direction rates are heading.


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    #10
    Idleater
    Registered Users Posts: 6,236 ✭✭✭Idleater


    Are trackers not worse than "standard variable" rates in an increasing interest rates period because you will be guaranteed to be paying more with immediate effect.

    L.


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    #11
    utopian
    Closed Accounts Posts: 139 ✭✭utopian


    nereid wrote:
    Are trackers not worse than "standard variable" rates in an increasing interest rates period because you will be guaranteed to be paying more with immediate effect.

    L.

    Indeed. AIB will have to have a big meeting after every rise to decide whether to pass it on to their variable rate customers. ;)

    Tracker changes kick in seven days after, rather than immediately, as far as I know.


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