How long to fix for - 1.95%
- Thread starter Chicci
- Start date
Brendan Burgess
Founder
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- 52,129
Hi Chicci
There is no right answer to this question.
Rates are too high in Ireland especially for people with an LTV of <60%.
But they have been too high for a long time and no one seems interested in dealing with this. So while they should go down, they might well go up.
But there is an oddity about the fixed rate market at the moment, which means that if you break out of a fixed rate, it's unlikely that the penalty will be very high.
So, my recommendation is that you fix for 7 years.
If rates rise, you will be pleased that you fixed.
If rates fall, you may lose out. Or you may be able to break out and fix again at the lower rate.
I understand that Avant has not yet figured out how to deal with borrowers who move home. As it is, you would just finish the fixed rate, and pay any penalty.
So, if you think that you might trade up at some stage, then maybe fix just for 3 years.
Brendan
There is no right answer to this question.
Rates are too high in Ireland especially for people with an LTV of <60%.
But they have been too high for a long time and no one seems interested in dealing with this. So while they should go down, they might well go up.
But there is an oddity about the fixed rate market at the moment, which means that if you break out of a fixed rate, it's unlikely that the penalty will be very high.
So, my recommendation is that you fix for 7 years.
If rates rise, you will be pleased that you fixed.
If rates fall, you may lose out. Or you may be able to break out and fix again at the lower rate.
I understand that Avant has not yet figured out how to deal with borrowers who move home. As it is, you would just finish the fixed rate, and pay any penalty.
So, if you think that you might trade up at some stage, then maybe fix just for 3 years.
Brendan
PebbleBeach2020
Registered User
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- 639
You asked for people's views. I gave my opinion that you should go for three years. I think the other options the original poster gave were too long at 5 and 7 years. You might want to pay off a lump sum sure.
Firsttimeuser
Registered User
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- 6
Hi Chicci, I'm not advocating you follow my advice, but from my experience, the certainty of known monthly & annual repayment(s) allows you to park that, live your life and focus then on all other financial decisions. 1.95% in anyone's book is still very cheap money, almost as low as some of the best tracker rates of old. Others might argue that there is the possibility of lower rates, which is valid. If you can live with the 1.95% repayments, then you should fix for as long as you are comfortable with, per Brendan above
Is the recent appearance of Avant on the mortgage market, an indicator, of additional competition coming into the market ? I believe it is.
I remember when Bank Of Scotland entered the market, if I recall, I moved to them, saving 1.00% on the rate, Shortly after they entered the market, most of the others dropped rates. Historically, new competition does have an impact, albeit slower than one might think.
From many recent reports, it seems that there is still room for lower rates in the Irish market, as we are so far above the EU average. The economic outlook, is that low rates will be here for at least a few years. As the poster qualifies for an Avant mortgage, then they have strong LTV, which will mean, they would also qualify for any new entrants onto the market, who would have similar LTV and other stricter conditions.
On balance, I see it as more likely than not, there will be lower rates available on the market in the near future,
so personally, I would go with 3 years maximum. Granted, it could go either way.
I have avoided fixed rates over the years, and stuck with variable, but moved banks a few times, eventually, I ended up on the NIB/Danske Bank LTV <50% rate of ECB +0.50% in about 2007. Maybe I was lucky ! But I reviewed every 2 to 3 years, and moved banks a number of times. Each time I moved, I also reduced the term by a year or so. Those moves combined, knocked more than 5 years off.
I remember when Bank Of Scotland entered the market, if I recall, I moved to them, saving 1.00% on the rate, Shortly after they entered the market, most of the others dropped rates. Historically, new competition does have an impact, albeit slower than one might think.
From many recent reports, it seems that there is still room for lower rates in the Irish market, as we are so far above the EU average. The economic outlook, is that low rates will be here for at least a few years. As the poster qualifies for an Avant mortgage, then they have strong LTV, which will mean, they would also qualify for any new entrants onto the market, who would have similar LTV and other stricter conditions.
On balance, I see it as more likely than not, there will be lower rates available on the market in the near future,
so personally, I would go with 3 years maximum. Granted, it could go either way.
I have avoided fixed rates over the years, and stuck with variable, but moved banks a few times, eventually, I ended up on the NIB/Danske Bank LTV <50% rate of ECB +0.50% in about 2007. Maybe I was lucky ! But I reviewed every 2 to 3 years, and moved banks a number of times. Each time I moved, I also reduced the term by a year or so. Those moves combined, knocked more than 5 years off.