Advice needed on whether to fix mortgage rate or not.

Hi, I'm trying to decide whether to fix my mortgage for a few years. I am single paying the mortgage completely on my own. Having been hit with all sorts of levies in recent months, I'm down about €400 per month in take home pay!

I have a current variable rate of 2.7% with repayments of €707 per month. My lender is offering 1 year fixed at 3.15% (€743 pm repayments), 3 year fixed at 3.6% (€782 pm)and 5 year fixed at 4.25% (€839pm).

Any advice as to what I should do? I am afraid that rates will start to increase more and more and I will struggle with repayments!

Many thanks in advance.

I cannot see the ECB raise interest rates until Feb/March at the earliest next year so to fix for a year might not be worth your while as by the time you come out of the fixed rate the next set of fixed rates will be up.
I am not a fan of fixing mortgages as I believe the banks will always make money over the life of the mortgage/fixed period.
Why not consider fixing 50% and leaving 50% variable. At least that way if interest rates stay low for longer you benefit from the variable rate and also you can pay off a lump some at any time without a penalty.

niceoneted said:

I cannot see the ECB raise interest rates until Feb/March at the earliest next year

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The ECB might not, but that only applies if the OP has a tracker. If they are on a standard variable rate I expect those rates to increase before the end of 2009, a lá PTSB.

Fair point TheBigD, I am on a great tracker for few yrs now so forget about that sometimes.

If I was in your shoes - I'd go for the 3yr fixed at an extra €75 per month and peace of mind for 3 years until (hopefully) we're out of this depression..let's face it - interest rates are only going to go one way over the next 3 years..