Should I fix at 3.8% from 4.33% SVR

D

David

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First post here from a novice, so please excuse my ignorance.

I am an EBS Mortgage customer (own home but in negative equity to the tune of €70k unfortunately €328k loan - €260k value) on a SVR of 4.33%.

I have been toying with the notion of fixing my mortgage for a period of two or three years at 3.8%, which would reduce my monthly repayments by €100/month. My main concern is that I expect the SVR to fall this year, but how significantly will they be reduced?

Would the the SVR be likely to be cut by significantly more than 0.5% over 24 or 36 months for me to regret the short term benefits?

I can't find much online by way of forecasting future rates and I understand it is impossible to do, but any advice is sought, nonetheless.
 
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I'm in the same predicament as you (albeit worse negative equity wise). I was very tempted to fix like you - EBS offering 2 years fixed at 3.8% and would bring down the repayments by approx €100 per month.

I feel however there is a reason the lending institutions are offering these fixed terms (in the past when I have asked about fixing the rates were always higher to fix). Other people I have spoken to say there is only one way the rates can go and that is down. I havent managed to get a straight answer on this forum to the very question you have asked. I'm going to take my chances and just hope the SVR drops considerably over the next while.
 
deltrotter said:
I'm in the same predicament as you (albeit worse negative equity wise). I was very tempted to fix like you - EBS offering 2 years fixed at 3.8% and would bring down the repayments by approx €100 per month.

I feel however there is a reason the lending institutions are offering these fixed terms (in the past when I have asked about fixing the rates were always higher to fix). Other people I have spoken to say there is only one way the rates can go and that is down. I havent managed to get a straight answer on this forum to the very question you have asked. I'm going to take my chances and just hope the SVR drops considerably over the next while.
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But how far would the SVR need to drop by to regret the benefits of fixing? I can't see several 0.25% SVR cuts over the next 24 months to bring the SVR below 3.8%.

They may drop below 3.8% in time but within a 24month period? Even if the SVR did drop by 1% to 3.33% within 24months, one could still be saving €100/month and will only be missing out on a further €100/month saving until the 24 month fixed period finishes?

So, how quickly the rate drops will be is key I guess. Would we see a 0.25% rate cut every 3-6months for 24 months? Can't see it, personally.
 
i fixed for 2 years from March. Ill take the money now thanks:). EBS are slow to cut rates. Even if they cut it again this year ill prob still come out on top. My 2 cents though. If you can switch go for it. If you think its worth the money then wait.

I figured 2 years at that rate aint the worst either way. Better than 4.33!!

You will be a long time trying to figure out what a bank is gonna do next.
 
I hear what you guys are saying and completely agree 100%.

I just feel I've been paying high rates for this long and with all the talk in the papers recently regarding high SVR who knows what will happen and would hate to fix for 2 years if something were to happen. I guess it's just about taking a risk.
 
Im not making an argument for fixed. It was just a decision i made. I need to see some benefit now.
2 years is not that long in the life of a mortgage IMO.

Id say it will go down in the summer some time... perhaps later in the year.. The question though is how much:).

Based on form I don't think it will be more than half a percent.
 
Think of it this way:

If you fix at 3.8% for (say) two years, for every day that the SVR remains at 4.33%, it would need to be at less than 3.27% for another day to make your choice "wrong".
 
Similar situation to the OP, tempted to go with 2 year fixed with EBS. I don't know a whole pile about interest rates but I wonder will our SVR drop by 0.5% by the end of this year and a further 0.5% next year.... It's a hard one to call. But based on Brendans advice here, I might just hold on for another few months.
 
It's one of the threads here, not sure exactly. Think there's one about fixing rates after banks cutting SVR 's. It's just his opinion but he knows a helluva lot more about these things than I do!
 
He's against it as a rule but he also agrees that fixing with a high LTV or even NE is a good idea.

Just can't see fixing at 3.8% for two years being a bad idea!
 
I'm in negative equity so I think I'll give it a few months. If SVR doesn't drop, I'll fix for 2 years.
 
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