Mortgage - Fix or not

It feels paradoxical so I thought I would confirm here. But it seems that going fixed and locking in the current high rates makes more sense than choosing variable.

Even if ECB rates do come down, variable rates may not follow quickly.

I guess it's a quirk of the Irish deposit market that new buyers are incentivised to fix.

I assume that if rates do fall that it will be expense to break a fixed mortgage

I also wonder how quickly Banks will reduce their fixed rates if ECB rates do come down? There will definitely be a lag.

A poll of economists indicated they believe ECB rates will be held stead through July 2024 with all agreeing there would be no more rate hikes in the current cycle. Now none of these economists have a crystal ball so take that with a pinch of salt.

Depends on the rates you have available with your lender but you could fix for a short period of time.

Lets say rates do decrease starting next summer, I assume they will decrease incrementally with a lag between banks updating their rates.

I know Brendan isn't a fan of BOI but I feel incentivised to go with their 3.95 4 year fixed. Hopefully we can switch to something competitive afterwards.

Compared to AIB's variable of 4.15% (4.25% aprc).

Since June 2022, ECB has increased rates by 4.5%, while AIB for example have increased their 5 year Green (50-80% LTV) Fixed rate by 1.6% to a position where their rate is now below the ECB rate. Had AIB increased by the same amount as ECB, the fixed rate on offer would be 6.65%!

So it seems they're funding new mortgage business from excess customer deposits. Should customer deposits start to drop as the cost of living/inflation eats into savings, I suspect the Irish banks (or at least AIB) wont be as quick to reduce their fixed rates as the ECB reduce theirs.

AIB customer deposits grew every quarter from Dec 2011, until June 2023 when deposits actually fell by 0.9%.

Is there a reason why the BOI 4 year fixed is at such a discount to every other fixed rate?

I just came out of a 5 year fixed 2.9% and moved to a variable BoI @ 4.45% which just went up end of October from 4.2%

Settled on doing something short term for now to see how things go so looking at a switch to PTSB variable 3.9% (Including cashback offer) then jump to a fixed if rates don't level out a bit.

PMackD said:

I just came out of a 5 year fixed 2.9% and moved to a variable BoI @ 4.45% which just went up end of October from 4.2%

Settled on doing something short term for now to see how things go so looking at a switch to PTSB variable 3.9% (Including cashback offer) then jump to a fixed if rates don't level out a bit.

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They are getting their moneys worth. I would say there are many ending fixed rates in the next few months. Coming out of a 3 year 2.9% to BOI to 4.15% variable rate or 4.25% 3 year fixed. Just looked at AIB and PTSB and the rates are not the best.

Is haven 3.65 rate and 4 years not the better solution right now. Rates won't just "drop" back down overnight, and even when they were down down many lenders weren't below 2.9/3 anyway?