Will interest rate rise affect my mortgage (due to draw down soon)

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Re: Will interest rates rise again?

Tarquin said:

We are due to close on 3rd March and I know that the ECB is sitting again on 2nd March and an increase is expected of interest rates. Our broker told us that we should not be affected by any increase as we will be closing the day after and that there should be a 'grace' period of a few days, after that, increase would kick in. Obviously, she couldnt say for certain. Does this vary from lender to lender, ie could one lender put up rates immediately and others not? We have gone for a fixed rate and our rate had already gone up from 15 February in anticipation of the March increase, hence why broker is saying it shouldn't happen again to us.

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Are you getting a fixed rate , variable rate or tracker ?

please see thread on this posted last Thursday,

Normally letter of offer from banks which quote rates say something to the tune that the rates are valid for *days, which means you have a period when you can drawdown the funds at the fixed rate even if the rates increase within this period. This is what we did, got letters of offer in Dec 2005 prior to rate rise in Dec, and drew down mid Jan at the fixed rates as quoted prior to rate rise.

Check the T&C's on the letter of offer.

Get the bank to confirm the rate and for what period it is applicable for, as is usual for their to be a grace period, but could vary by lender, think ours was something like 56days.

Hi,

I posted a new thread not realising this was here... Just wondering if anyone know's how fast the bank will will act upon the new rate (assuming the ECB rate goes up today). I'm drawing down tomorrow. The loan is fixed for the first year at 2.94% rolling into a tracker after that (AIB).

The way it's phrased in my loan offer doesn't bode well:
"... Notwithstanding this the rate shall be set at a fixed rate (currently 2.94% per annum and subject to quotation at date of drawdown) for 12 months from date of drawdown."

So obviously they can change the rate... but will they act that fast? Should I consider drawing down today to avoid that? And what would happen if I draw down today, but the sale fell through tomorrow???

Any advice appreciated!
Bill

There's usually a few days period of grace where existing fixed rate offers will be honoured. As you (and the OP) are closing tomorrow you should be fine but give AIB a call if you are concerned.

Sarah

www.rea.ie

Hi,

don't know what it going on but if the bank hadn't alerted my solicitor, we would have been closing on a higher rate yet again. The only reason the bank rang the solicitor is because we had all documentation in prior to 1 March.

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no you would'nt banks have not increased rates since the 28th of Feb. Seems a bit strange of the lender to indicate that you needed to drawdown , unless of course your grace period from the previous rate increase in Dec was due to expire on 1/3/06

Hi Tarquin,

That does seem strange to me. What bank are you with?

I rang AIB today and while no one was putting their neck on the line they said that they would be told the night before the change was to be made and all mortgage's drawn down after that would be at the new rate. So it's not so much a period of grace, but whenever the bank updates their rates.

She said that no one (including staff) would be given prior indication of when the rates would change.

Apparently the last time it was 2 weeks after the ECB announcement that the new rates kicked in (for fixed rates). I'm taking a gamble and hoping it hasn't kicked in early next week. Fingers crossed.....

Cheers
Bill