Fixed Mortgage Interest Rate - To Switch or not?

Q

QED

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We have fixed rate of 5.08% for next 4.5 years with AIB. There's approx 280k left on mortgage. (30 years)

Given that AIB's Standard Variable is now 4.5% and almost guaranteed to fall further, I am looking for some advice on whether to change or stay fixed.

Am I correct in assuming that the penalty will be approx €6,500 and it will be beneficial to switch if rates average at less than 4.5% over the next 5 years?

In previous recessions and throughout the world, has there been a trend in interest rates once there are signs of recovery. (I know this may be a few years off). Is there any indication of how fast interest rates will rise?
 
Switched mine from 5.05% fixed last Thurs for free. Call AIB Mortgages on 01 772 6622 to find out how much it'll cost you. AIB rates don't change until COB today, so you may save yourself over €6,000 (or whatever you think it might be) by sorting this today. You'll need to send them a fax requesting the change with all mortgage holders' signatures on it.

Feel free to PM me if you want. Call them straight away though. Don't bother going through your branch.
 
Thanks for the info.

I rang the AIB number but they said the query has to go to accounts department and they will post out information on switching.
 
Hi there,

I did exactly what you are considering on Monday as I knew the knew rates were being posted as of Tues (18th) and knew that the standard variable would come down. I expect another rate cut so it was a no brainer for me as long as I could avoid the breakout fee.

On the information you have provided, you will not be charged a breakout fee even after they reduced their standard variable as this is not what they calculate the breakout fee against. It is calculated against the current rate of the fixed rate mortgage that you took out (ie the current 5yr FR).

In your case there will be no charge as the current 5yr fixed rate is higher than 5.08%.

So... until the fixed rate goes below 5.08% you are safe to move at no cost. They should confirm this to you in a letter if they have sent it to Accounts for processing. If there is another .5% cut, the SVR will be 4.0% which is a 1.08% saving for you every month. I cannot see rates going up for a long time myself.
 
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