ICS - fix or not?

I know this topic has been covered but please bear with me! I took a mortgage of 380k over 30 years out last August with ICS. Currently our rate is a 2 yr discount rate of 2.09% (or €1456.56 a month). My husband was temporarily let go in January and so far no sign of things picking up and no work out there for him. I'm a civil servant and have a sneaky feeling I will be taking another wage reduction in the next budget.

I enquired about fixing and was offered the following:

2 years at 3.15% (€1670 pm)
3 years at 3.6% (€1760 pm)
5 years at 4.25% (€1900 pm)

I worked out with TRS that the actual money I'd be paying would be an additional €155 a month if I went for the 5 years instead of the 2. Or an additional €300 a month over what I'm paying now.

Should I fix or stay put? When I took out the mortgage initially we were paying €2,160 a month, can't remember the rate. If it went back to this I wouldn't be able to meet the repayments by myself. We will be renting a room out for €400 a month by the end of August so if I did fix this would cover the difference. I'm just terrified that if I fix I might regret it in a few years.

I'd appreciate any advice. Thanks

The 2.09%. Is that a discounted fixed rate or a variable rate? Has it remained at 2.09% since August 2008.
I presume variable but just to be sure.

Think you might be more terrified of the rates going back to your original payment level?
Given your changed circumstances since the original mortgage, it appears to me that you cannot afford any more uncertainty.
Fixed rates can be criticised, but they do serve a purpose. If peace of mind is as valuable to you as it might suggest by your post, then the extra cost in the short term is probably worth it to you

Sorry that's a variable so it has come down considerably since December but I'm afraid it might start to go up considerably!

Amgd28, I'm definately after peace of mind but not sure if I want it for 2 years or 5! Would 4.25% be a good rate in 5 years? The repayments are still less than what I was initially paying in December so if the variable rates go back to what they were 8 months ago I'd initially be saving money, iykwim!

I don't think you'll get any benefit of fixed by just going to 2 years to be honest. If I were a betting man, I would think that that will be just about the time that the rates are going to rise consistently.
Personally I was stung when bought my house 7 years ago and rates dropped significantly while I was on a fixed rate. At the time I reckoned I wouldn't fix again. But looking at things right now, I certainly feel that at some stage (could be next year or the year after), rates need to rise to protect agains inflation in the coming years. That's why I'm looking to switch to five year fixed myself..
Personally I would be astonished if 4.25% was not far better than the prevailing variable rates in 5 years time... but nobody has a crystal ball. That's why the question is more about the peace of mind element and affordability of the 4.25% rate....

Your rate actually looks like a discounted tracker. If you are only concerned about the immediate future I would keep with a tracker rate for the next twelve months as I cannot see ECB rates moving in the short term. Havig said that I would think that fixed rates would be a lot higher in 12 months time....but I'm no expert!!!

Personally if I was fixing it would be for the longer term, nobody can predict where rates will be in 5 years and if 4.25% will be a decent rate.

Just remember you will be paying the premium now for the security of constant mortgage repayments for 5 years (not to save money) . If you are thinking of fixing for 5 just accept the fact you will be on a higher rate for the next 5 years and don't look back in anger if rates fall.

Be sure that in those 5 years you will not want to overpay, pay back a lump sum, switch or pay off you mortgage.



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Thanks everyone for your advice. I might hang on until Christmas and see if work picks up for himself between now and then. Or wait and see if rates start to increase before then.

Thanks again.