Fixed but for how long?

P

peepee

Registered User
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Okay, so i know there are a few threads about this but in light of the independents
lead today Significant blow for mortgage holders: low tracker rates to rise
ive decided to ask the question again.

Its not an issue for me, but my brother was discussing his mortgage with me. He is not in a position to switch. Doesn't forsee that changing in the short term. With BOI, offered 3.1% 3yrs, 3.3% for 5 yrs. SVR is 4.2 so this is not an option. 220k left, LTV <60%.

Opinions?
 
As your brother cannot move getting a 1.1% reduction by fixing for 3 years sounds ok.If he wants certainty that's the way to go.
I doubt BOI will ever drop their SVR to below 3%
 
And maybe BOI know more about the future direction of their own SVR than the general public does.

Maybe they think that they will be forced to reduce their SVR to be closer to European norms.
 
Richie Boucher has made it clear that BOI will keep their SVR at an artificially high rate.
 
pclarkeo said:
I posted this in the key post and it was deleted...not sure why, it relates directly to the key post...here: http://www.askaboutmoney.com/threads/mortgage-rates-best-buys.197714/

So in that post Brendan strongly says not to get a Fixed Rate mortgage. In light of recent articles suggesting that the ECB will raise their interest rates..is that still a good idea??
Click to expand...

If you think that the Irish Banks are not aware of the recent articles suggesting that the ECB will raise their interest rates, then yes maybe you should fix before the banks figure things out. :):):)

Personally I think that the reports of coming ECB rate rises are over stated, the wont happen as soon as the papers are speculating, and that the pressure on Irish banks to reduce variable rates closer to European norms will mean that now may be an even worse time than usual to fix.

You may have a different opinion, but I wouldn't bet my house on knowing more about it than the banks.
 
But at the same time, we have FF pushing through a bill to give powers to the CB to force Irish banks to lower their rates. Yes the CB have said they don't want those powers, but they may have them later this year.
What impact then on interest rates here?
 
I would agree with Creamegg ...chance of an ECB rate rise anytime soon not that likely, far to many uncertainties at the moment.
I have to say I though that article in the indo was very poor journalism as usual designed to grab attention with a misleading headline.
Germans have been calling for interest rate to rise for years , nothing new has happened so to suggest that tracker mortgage holders are in for a significant blow is rubbish. If you are a tracker mortgage holder with ECB + 0.50% you will always be better off that Variable rate and most likely better off than any fixed rate holder. The relationship between Interest Rates and ( Economic Growth / Asset Values / Wage rate inflation / general levels of inflation ) over time protect you ...pay more interest ya but earn more wages etc.
 
pclarkeo said:
So in that post Brendan strongly says not to get a Fixed Rate mortgage. In light of recent articles suggesting that the ECB will raise their interest rates..is that still a good idea??
Click to expand...

There is no strong reason for the ECB to hike rates. Most of the European economy is a mess and there is little or no inflation. Even the Indo guesstimate is 2019 for a rate hike. It is plausible Europe/America will be in a recession by then and the ECB can't increases. AFAIK empirical data indicates the only side that benefits from fixed mortgages are banks. Although some people will happily pay a premium knowing their variable mortgage rate is not increased.

The Central Bank does not think the Government should cap interest rates, but will do what the Government tells them to do. I don't agree with caps either. But the fact there is so many people with dodgy credit ratings locked in SVR of 4.5-4.9% with vulture funds, the Government might have no choice but to force these funds to cut rates. The cap will distort the market, but the market is distorted anyway...
 
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