Choosing a mortgage rate....

I'm just coming off a one year fixed rate of 2.55% so all of these are going to mean a subsantial increase but which would you choose and why?

Tracker Variable @ 4.25%

Standard Variable @ 4.35%

1 Year Fixed @ 4.65%

3 Year Fixed @ 4.85%

5 Year Fixed @ 4.99%

The house is a long term investment and i don't invisage having to sell it in the near future.

Cheers
Dusty

I'd go for 5 year fixed at 4.99% just to have certainty and to avoid rates going even higher(however likely). Many commentators expect them to hit 4% in 2007 especially since the data from the eurozone is becoming more and more positive for economic growth while threat from inflation remains.

Personally if I was thinking of fixing for 5 yrs I'd be shopping around, the cheapest 5 yr I can see at the mo' is NIB's 4.65% the difference over the 5 yrs is quite alot. Not 100% if that is the cheapest but there's no way I'd be opting for 4.99% when there is clearly cheaper available.

I also wondered what whould be the best way to go with a mortgage. I live abroad and will be returning to leave in Ireland with my new apartment as my residence in about eighteen months time. I will not be renting the apartment in the meanwhile. My Mortgage will be for about 130,000 Euro over a 20 year term. I may be in a position to pay off some of the capital just before I return and obviously won't want to be penalized for that. What type of Mortgage would be best. Any ideas? I'd appreciate any comments.

I would be reticient to advise anyone to fix for 5 years. Whilst bearish is correct in that in the short to medium term we will have another 0.5% increase, with possibly some more to come next year, 5 years is a long time. What you've got to do is to check the difference that various worst case scenarios make for yourself, ie check the repayments if rates are x,y,z ......, then you've got to factor in your income and the possiblility of wage increases etc and see how all that works out. If you can manage comfortably enough with a worse case scenario of say 3%(ublikely, but who knows) above the current rate, then there is no need to fix, if not, you may want to think about fixing. Remember banks are in the business of making money, whatever 5 year rate they're quoting you is set at a level that they think they'll make money on.