Mortgage holders advised to fix loan rate now

**Ringo** · 17/06/2009, 6:10 AM

http://www.independent.ie/national-n...dvised-to-fix-

loan-rate-now-1775739.html
'Rates available on the market are unlikely to be repeated '

MORTGAGE holders were yesterday advised that now is a good time to fix their home-loans.

The warning was issued because rates that banks charge each other for loans in the eurozone have come off their lows and are now starting to rise.

Fixed rates available to homeowners on the Irish market are the lowest they have ever been and are now likely to start rising, Ulster Bank economist Simon Barry said yesterday.

Wholesale rates, or the interest rate banks charge each other, for three-year fixed loans have jumped from 2pc in mid May to 2.4pc at the moment.

To fix or not to fix, that is the question

. I'm on a tracker & have enjoyed the benefits of he drop in rate. I know plenty of people tied into a fixed rate who are hurting now. But rate are low. Can't see them going any lower.

**Macy** · 17/06/2009, 7:40 AM

It depends on whether you see them raising in the short term (I don't see it myself for a good few months). I'm just out of a 3 year fixed - I wasn't stung too much as we weren't at too bad a rate - but I wouldn't be rushing to fix at the moment. If I was on a tracker I definitely would be relunctant to give it up. However, the big advantage of the fixed rate is being able to budget an exact amount, so it really depends on your circumstances.

It must be pointed out, there are advantages to banks of you fixing - they've tied in your custom for the next number of years and you are (very likely to be) paying more than the current interest rate for the whole life of the fixed rate. They try to guess what's going to happen as the basis for the fixed rates, so there's generally not money to be made for the customer. I'd be sceptical of a bank economist telling people to do something that's clearly in the banks interest.

**OneRedArmy** · 17/06/2009, 8:58 AM

Future consensus rate expectations are priced into fixed rates.

So by going fixed, you are effecting gambling that rates will not just go higher, but will be higher than consensus estimates.

Given the recent dismal record of the economics profession that's probably not a bad punt, but bear in mind it is a punt all the same.

What is true is that the potential upside is a lot smaller than the downside (I.e. rates can't go much lower but can go a hell of a lot higher).

**passinginterest** · 17/06/2009, 9:13 AM

I was just thinking about this on the way home from work yesterday. We failed to see the impact of the big drops immediately when we discovered our "non-standard variable" wasn't passing on the drops like the others (typical special staff rate ends up costing more), once we moved to standard variable we started to make serious savings.

I was thinking yesterday would it be worth looking into fixing it now seeing as rates can't really get any lower and there looks to be a recovery on the horizon for some of the bigger economies. I think a year to 18 months down the line we'll definitely look to go fixed rate but we'll just ride out the benefits of the super low variable for another little while.

**Dodge** · 17/06/2009, 9:18 AM

Our mortgage providor (PTSB) sent a letter out asking if we'd like to meet to review our options. I'm guessing this is the start of banks looking ot fix mortgages for those of us on trackers

**Fr Damo** · 17/06/2009, 9:43 AM

IMO...ECB Rates will increase .25 by End of Sept and I would not rule out another rise by end of Dec, Germany confidence is highest for 3 years according to RTE yesterday. Therefore I am about to fix mine. I am currently with Ulster bank who charge us 1.05 above base so I'll be shopping around as my "Balance Sheet" is still in positive terrority.

Not good news for the pigs, Portugal Ireland Greece and Spain.

**anto1208** · 17/06/2009, 10:27 AM

I think this line should be taken into account

Ulster Bank economist Simon Barry said

hhhmmmmm banks giving advice to buy "this more expensive" product ???

At the moment im on a 2% interest rate the fixed rates in Halifax for 5 years are 4.5% So changing now would cost me a fortune and the rates would have to get well up over 5% in the next 5 years for it to be worth my while.

The way i see it is the variable rate would have to be up to 5 % in 2 1/2 years and up to about 8% by the end of the 5 years to make me break even.
Are they going to go that high ??

**pete** · 17/06/2009, 10:50 AM

Originally Posted by OneRedArmy

Future consensus rate expectations are priced into fixed rates.

By fixing your rate you are really gambling that you know better than the bank. Given the bank employ people to predict rates I think i'll pass on that.

IMO the only valid advantage of fixing rate is the security of knowing the payments.

There is something to say for variable rates as they usually would be lower when economic times bad like now which is when wages not as good. On the other hand when wages higher variables rates should be higher. (This obviously assume Euro zone operates as one)

Tracker Mortgages are like gold dust. Would be idiotic to leave one.

The Financial Regulator should be having a chat with Ulster Bank today as having their economist recommending fixed rate mortgage is a clear conflict of interest.

**Fr Damo** · 17/06/2009, 11:14 AM

[QUOTE]

Originally Posted by anto1208

I think this line should be taken into account

Ulster Bank economist Simon Barry said

hhhmmmmm banks giving advice to buy "this more expensive" product ???

At the moment im on a 2% interest rate the fixed rates in Halifax for 5 years are 4.5% So changing now would cost me a fortune and the rates would have to get well up over 5% in the next 5 years for it to be worth my while.

Halifax are the most un competitive in the Market at the moment, so says the Sunday Independant column, me and my money last Sunday 14th June .Cheapest was AIB I think.

**passinginterest** · 17/06/2009, 11:50 AM

[QUOTE=Fr Damo;1179294]

Halifax are the most un competitive in the Market at the moment, so says the Sunday Independant column, me and my money last Sunday 14th June .Cheapest was AIB I think.

Just had a quick look and AIB would seem to be cheapest offering a 5 year fixed rate around 3.6% BoI have one at 3.3% but the Mortgage calculator I used siggested AIB was the cheaper option, must be some hidden charges with BoI one.

**anto1208** · 17/06/2009, 1:29 PM

[QUOTE=Fr Damo;1179294]

Halifax are the most un competitive in the Market at the moment, so says the Sunday Independant column, me and my money last Sunday 14th June .Cheapest was AIB I think.

When i switched i got onto a tracker which where like gold dust at the time and they gave me a 1% discount for 2 years !! So it worked out really well for me at the time even asked BOI to match it before i moved and they said they couldnt offer me anything even close to that. I was really lucky to get on a tracker dont think ill be fixing it any time soon but i do understand that it is a good option in certain cases just not mine i think.

I just worry that with the UK and the US saying they are coming out of their ressesion now that other european countries will start to come out of theirs as well and the ECB will raise rates but Ireland will be another 2 or 3 years behind the UK we could get screwed with high interest rates but no jobs/high wages to match it.

**Ringo** · 18/06/2009, 6:11 AM

THE era of historically low interest rates is coming to an end after one of the country's biggest banks hiked the cost of its fixed-rate home loans yesterday.

AIB is increasing the cost for homeowners who opt for a three-, five- or 10-year fixed rate.

And other lenders are set to follow suit imminently.

Economists said the move was a sign that the European Central Bank (ECB) could soon begin raising rates again after a record series of seven cuts.

http://www.independent.ie/national-n...e-1777600.html

**Macy** · 18/06/2009, 7:18 AM

oneredarmy - the fact that AIB are on increasing the rates for the 3,5 and 10 year mortgages mean they're expecting rates to be fairly static for the next couple of years? I guess that assumes they offer 1 or 2 year fixed rates too, and they're not effected rather than INM not reporting it.

**Fr Damo** · 18/06/2009, 7:35 AM

I just worry that with the UK and the US saying they are coming out of their ressesion now that other european countries will start to come out of theirs as well and the ECB will raise rates but Ireland will be another 2 or 3 years behind the UK we could get screwed with high interest rates but no jobs/high wages to match it.

[/quote]

That's exactly why we are going to lag in recovery. The only shining light is if there is a "global" pick up at least FDI jobs and multinationals here will also see the up turn which may mean job losses in that sector are curtailed.

I'm going to try and fix mine for three years with my Bank (Ulster) and fingers crossed my judgement will be better than theirs. I said I think that in the next 18 months we could be at 2.5%-3% at the ECB meaning most variable mortgages would be 1.1% above that. Does anyone know if there a bank offering a three or five year fixed rate at just less that 4%?

**Macy** · 18/06/2009, 11:29 AM

Lunchtime on Newstalk are saying they've a panel of experts to discuss this "coming up soon", but aren't being specific when exactly so if you're interested you'll have to sit through it (it's the sub bloke, not Keane today).

EDIT: After 1 they're saying now. Dick(head) Roche on now, so might be best avoided...