AIB Mortgage & July Rate Reductions

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rpg

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Hi all,

We're currently in the process of finalising a mortgage with AIB, and I don't really know whether it's good news or bad news for us, as we'll probably have things finalised/signed before the 1st July.

We're borrowing > 80% of the property and so our only option LTV wise is 3.75% - but this will drop to 3.5% from the 1st July.

Now the 1 year fixed rate we were going to choose was 3.5% (so the same as the LTV will be from July).

Some of you may know already that the SVR rate is no longer available to choose off the bat, and only applies once a fixed rate expires. So can't take advantage of that.

I'm just worried picking a fixed rate now is silly considering the frequent rate reductions. AIB say we can switch to a fixed rate at any time during a LTV mortgage, so surely fixed rates will come down also in due course (or else nobody will choose them as they'll be uncompetitive).

I can't see any other disadvantages to choosing a LTV mortgage over a fixed rate one initially?

All thoughts welcome and thank you for reading.
 
rpg said:
Hi all,

We're currently in the process of finalising a mortgage with AIB, and I don't really know whether it's good news or bad news for us, as we'll probably have things finalised/signed before the 1st July.

We're borrowing > 80% of the property and so our only option LTV wise is 3.75% - but this will drop to 3.5% from the 1st July.

Now the 1 year fixed rate we were going to choose was 3.5% (so the same as the LTV will be from July).

Some of you may know already that the SVR rate is no longer available to choose off the bat, and only applies once a fixed rate expires. So can't take advantage of that.

I'm just worried picking a fixed rate now is silly considering the frequent rate reductions. AIB say we can switch to a fixed rate at any time during a LTV mortgage, so surely fixed rates will come down also in due course (or else nobody will choose them as they'll be uncompetitive).

I can't see any other disadvantages to choosing a LTV mortgage over a fixed rate one initially?

All thoughts welcome and thank you for reading.
Click to expand...

I assume you are talking about a SVR mortgage instead of fixed rate?
Personally I wouldn't fix at this point but your situation is different given you are on LTV > 80%, so this might be the cheapest option for you at the moment.
A fixed rate of 3.5% isn't too bad, and you are "only" fixing for a year in any case.
I don't think that there will be any significantly cheaper standard variable rates (SVR) for LTV >80% on offer over the next year.
However, of you can get the SVR rate of 3.5% I'd certainly use that instead of fixing.
 
rpg said:
We're borrowing > 80% of the property and so our only option LTV wise is 3.75% - but this will drop to 3.5% from the 1st July.

Now the 1 year fixed rate we were going to choose was 3.5% (so the same as the LTV will be from July).
Click to expand...

Your lucky you didn't fix.

You will be getting an LTV rate of 3.5%. The speculation in the papers at the weekend was that this will fall by September.

AIB to cut SVR in September?

FF has a bill in the Dáil tomorrow night which could become law by September or October.

This is not the time to fix at any rate over 3%.

Brendan
 
Thank you both for the responses.

Yes that's what I thought re: fixing now, but AIB have made it a little awkward for us and told us that if we choose a LTV variable rate at the beginning, we can never move on to the standard variable rate (which seems to be always lower than our LTV rate):

"At the moment, If you choose a LTV rate now, you can fix it at any time. When the fixed term is complete, you cannot avail of the Standard Variable rate, it will be the LTV rate that you commenced with at the letter of offer stage.

If you opt for the Fixed rate at the beginning, you can avail of the Standard Variable, Fixed Rate and LTV rates when the fixed rate is completed."

AIB Variable Rates
LTV Variable >80% 3.75%
LTV Variable >50%<=80% 3.55%
LTV Variable <=50% 3.35%
Standard Variable (Discontinued) 3.65%

So to avail of the standard variable rate in the future, I'm considering just doing fixed for 1 year, so I can eventually avail of it. It really seems a shame to do this though.
 
That is certainly odd. I hadn't realised that anyone was moving to the SVR these days.

It's still worth going for the LTV rate in my opinion.

Brendan
 
If only I could have got myself in to the 50-80% LTV range; then this would solve all my problems!

With potential future rate reductions on the near horizon, I really don't want to fix but I would like to have the option of the slightly lower SVR eventually should I need it.

I guess the question is whether I can avail of the 50-80% LTV rate in a few years time, because I know if I choose LTV now I'm locked into the >80% rate for the term of the mortgage (unless I switch providers).
 
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