Variable rate

popsy09

Have to decide pretty soon if I am to go on a 4.5% variable or can fix for 2 or 3 Years at 4%

All the talk about variable going down seems to be just talk, tsb came out today and more or less said they won't be dropping anytime soon i presume other banks will be in same position

At the moment I'm leaning on a fixed rate for 2 years as if the variable drops it might be a year off yet and even if it drops 1% i won't be too out of pocket

I know its the million dollar question as such and nothing is for certain but would just like a few opinions

I'm with boi by the way

shoehorn

popsy09 wrote: »

Have to decide pretty soon if I am to go on a 4.5% variable or can fix for 2 or 3 Years at 4%

All the talk about variable going down seems to be just talk, tsb came out today and more or less said they won't be dropping anytime soon i presume other banks will be in same position

At the moment I'm leaning on a fixed rate for 2 years as if the variable drops it might be a year off yet and even if it drops 1% i won't be too out of pocket

I know its the million dollar question as such and nothing is for certain but would just like a few opinions

I'm with boi by the way

What else would TSB come out and say?

They're pushing the fixed rates to lock you in, since they know rates will drop over the coming years.

Don't fix.

David900

shoehorn wrote: »

What else would TSB come out and say?

They're pushing the fixed rates to lock you in, since they know rates will drop over the coming years.

Don't fix.

Just curious where you see the drop in rates coming from in the next couple of years?

enfant terrible

Could PTSB just refuse to drop there rates even if there was a drop?

ted1

Why BOI ? Aib offer 3.5 for new mortgages. Either way I wouldn't fix for to long. There is pressure on the banks to lower rates and variable rates will be a key election issue. Water charges are a non issue compared to variable rates.

There is 350,000 votes for sale to the party that brings variable rates in line with europe.

TSB aren't looking to offer mortgages, if they where to drop rates they would bring in charges and lose money in deposit.
They just about passed a stress test so lending money isn't really what they want/need to do

MaggotBrain

PTSB are "aggressively lending" at the moment. Words straight from the mortgage advisor. Lent more in jan/feb than all 2014 also, although that means nothing.

Also no government will force a bank into lower SVR. State owned or not.

popsy09

I know aib offer 3.5% and kbc might be even cheaper but I am with boi for everything so when I went about applying last year they were more than happy to approve me so I just stayed put

Might seem stupid but it was a very straight forward process with them and I was happy at the time , anyway that's besides the point I am where I am now

Every one I talk to is saying don't fix the rates will drop soon , just how soon will soon be ? I personally can't see it happening anytime soon and with being fixed for say 2 years at .5 % less is really appealing to me at the moment

murphaph

I don't understand the logic. You are already paying well over the market rate by taking the path of least resistance and going with your current bank. Don't fix... You're already a percent over market rate as it is.

L'prof

We talked to a financial advisor yesterday who has no vested interest in whether we fixed on our mortgage or went variable and his take on it was that he couldn't envisage mortgage rates dropping too far if at all. Either way you're taking a chance, but aren't going to lose out massively. We're going to fix for 5 years on the basis that we know we can afford it and at the moment it's the cheapest option of all available to us. I will of course keep an eye on interest rates to see whether or not we've ultimately gained or lost out by that decision but I don't see the logic of berating someone either way.

MaggotBrain

Just be careful all but AIB switch you to the SVR after the fixed period is up . The LTV discounted rates will be unavailable to you. Over the full term you are paying extra for this reason.

James Bond Junior

popsy09 wrote: »

I know aib offer 3.5% and kbc might be even cheaper but I am with boi for everything so when I went about applying last year they were more than happy to approve me so I just stayed put

Might seem stupid but it was a very straight forward process with them and I was happy at the time , anyway that's besides the point I am where I am now

Every one I talk to is saying don't fix the rates will drop soon , just how soon will soon be ? I personally can't see it happening anytime soon and with being fixed for say 2 years at .5 % less is really appealing to me at the moment

I am in the same boat. Was all ready to go with boi as I have everything with them. My mortgage is very small (c100k) and the difference over the life of the mortgage between boi and kbc was €18000 at today's rates. I would have been repaying an almost extra 20% of the loan amount. You're going to be paying enough interest as is, why pay thousands more?! It equates to an initial repayment difference of 50 a month. And it took me 2/3 hours to sort out applying with kbc as I had everything they required ready for BOI.

alibab

I was with boi for everything also and applied to them and AIB . I found my own bank very difficult to deal with and in the end could not justify the extra in interest so went with AIB . The girl in BOI kept telling me I was mad to miss my stamp duty being paid . I told her I was looking at the bigger picture. In 10 years Boi could be the better option but I went with the here and now.

hfallada

L'prof wrote: »

We talked to a financial advisor yesterday who has no vested interest in whether we fixed on our mortgage or went variable and his take on it was that he couldn't envisage mortgage rates dropping too far if at all. Either way you're taking a chance, but aren't going to lose out massively. We're going to fix for 5 years on the basis that we know we can afford it and at the moment it's the cheapest option of all available to us. I will of course keep an eye on interest rates to see whether or not we've ultimately gained or lost out by that decision but I don't see the logic of berating someone either way.

You only fix if you think the rates are going to go up. Interest Rates arent going to go up from the ECB baseline for at least 2/3 years. The US economy is now 5.5% and they are warning the FED not to increase rates as it will damage economic demand. Eurozone Unemployment is about 10% and we are in deflation. There is no chance of a rate increase from the ECB

German banks are getting a mere 1.01% on 10 year mortgage fixed. Yet a fixed mortgage in Ireland is around 4-5%. It doesnt make any sense. I can see an European bank coming into Ireland, to take advantage of the high rates and increase competition aka lower interest rates

There is no point fixing now, when rates are going to be the same for next 3 years. If you fix your mortgage, you might be on 6-7% interest in 5 years. Where as if you fixed before the rates increased, you would have 5 more years of low rates.

I would maybe fix for 2 years and then fix again before banks increase their rates. But fixing your mortgage now is irrational.

Greyian

hfallada wrote: »

German banks are getting a mere 1.01% on 10 year mortgage fixed. Yet a fixed mortgage in Ireland is around 4-5%. It doesnt make any sense. I can see an European bank coming into Ireland, to take advantage of the high rates and increase competition aka lower interest rates

Just on that point, it's hardly surprising that interest rates here are higher (and other banks haven't come into the market in droves to capitalise on the higher rates) when it's near impossible to repossess the property in the event of long-term arrears.

To-date, mortgages in Ireland have effectively been low-interest unsecured loans.

maynooth_rules

popsy09 wrote: »

I know aib offer 3.5% and kbc might be even cheaper but I am with boi for everything so when I went about applying last year they were more than happy to approve me so I just stayed put

Speaking as someone who has been there, do NOT show any loyalty to a bank. They will show no loyalty whatsoever to you. Also on top of that BOI have pretty much the worst rates on the market. I have always banked with PTSB and wanted to get my mortgage with them. The house we wanted needed some work done to it. They dragged out everything and then wanted builders quotes and everything like that for the work we need to do in the kitchen. In the end i told them forget it, walked out and AIB were more than happy to sort us out without difficulty. Loyalty with banks gets you nowhere

popsy09

Its not loyalty to the bank its just last year when I was enquiring about a mortgage I had to do hardly any work and before i knew it I was approved

I didn't buy at the time so left it run out but just after Xmas I decided I wanted a place of my own and it was just hassle free at the time and I didn't have to look elsewhere

May be stupid on my behalf but I am after putting deposit down now on a place and don't want to mess things up so I am just staying with boi

Again it might not be the smartest move but I do not want to risk losing this house as I got it by the skin of my teeth and I know it would be sold straight away if i encountered any difficulties

I understand rates will not go up anytime soon (outside some disaster ) so a variable is OK to have but the fixed is .5% cheaper than it for 2 years , I could fix at 4% for 2 Years and come off it and the variable still be at 4.5%

I am just looking for advice in my situation I don't want other banks rates and better offers as such I am happy to stay with boi

James Bond Junior

popsy09 wrote: »

Its not loyalty to the bank its just last year when I was enquiring about a mortgage I had to do hardly any work and before i knew it I was approved

I didn't buy at the time so left it run out but just after Xmas I decided I wanted a place of my own and it was just hassle free at the time and I didn't have to look elsewhere

May be stupid on my behalf but I am after putting deposit down now on a place and don't want to mess things up so I am just staying with boi

Again it might not be the smartest move but I do not want to risk losing this house as I got it by the skin of my teeth and I know it would be sold straight away if i encountered any difficulties

I understand rates will not go up anytime soon (outside some disaster ) so a variable is OK to have but the fixed is .5% cheaper than it for 2 years , I could fix at 4% for 2 Years and come off it and the variable still be at 4.5%

I am just looking for advice in my situation I don't want other banks rates and better offers as such I am happy to stay with boi

Shop around. You're not tied to any bank just by getting approval. My approval from Kbc took about 3 working days.

ted1

popsy09 wrote: »

Its not loyalty to the bank its just last year when I was enquiring about a mortgage I had to do hardly any work and before i knew it I was approved

I didn't buy at the time so left it run out but just after Xmas I decided I wanted a place of my own and it was just hassle free at the time and I didn't have to look elsewhere

May be stupid on my behalf but I am after putting deposit down now on a place and don't want to mess things up so I am just staying with boi

Again it might not be the smartest move but I do not want to risk losing this house as I got it by the skin of my teeth and I know it would be sold straight away if i encountered any difficulties

I understand rates will not go up anytime soon (outside some disaster ) so a variable is OK to have but the fixed is .5% cheaper than it for 2 years , I could fix at 4% for 2 Years and come off it and the variable still be at 4.5%

I am just looking for advice in my situation I don't want other banks rates and better offers as such I am happy to stay with boi

Have you Any idea if the difference that you will be paying? It will be over a years salary because you are lazy. Look you gave the offer from one bank, now shop around you can change banks without losing the house .

popsy09

I am with boi now and do not want to change

Will be moving in to the house in 6-8 weeks

I am asking about interest rates and that's it, not which bank is better

zagmund

Is this you by any chance?

Seriously, you're asking people whether you should go for the gold plated BMW or the platinum lined one and people are telling you that you don't need to spend that money if you are going to be stuck on the M50 or Tescos car park all day - just go for the one that will be cheapest in the long run. By all means buy the really expensive one, but don't worry about whether the fixed or variable is better value - practically any other bank is better value.

All I'm saying is, when you look back at this in 5 years time and you don't mind that you voluntarily entered into *the worst value deal on the market* for what is likely to be the biggest financial transaction of your life, will you send me a cheque for a couple of grand?

z

James Bond Junior

You will not lose the house by enquiring.

You go into a garage and put a deposit on a gorgeous car for 20k but it's going to take a few weeks to be registered. It will take a while to sort but it's the car you want so you can wait. You have finance arranged with boi which means the car will cost 23000 over 1 year but if you go through the motions the credit union will cost 21k. You're waiting for the paperwork so why not arrange for the car to be financed by the credit union. The garage doesn't care where the money comes from as long as they get their 20k.
It's the same with your house. You are waiting for paperwork to be done so use the time to shop around. There is no gun to your head saying you have to go with one bank over the other. Why pay TENS OF THOUSANDS more just for a FEW HOURS less work. Boi are giving you the money which you can still take but you have the option to get it cheaper shopping around with a lot less effort than you think.

Villa05

zagmund wrote:

All I'm saying is, when you look back at this in 5 years time and you don't mind that you voluntarily entered into *the worst value deal on the market* for what is likely to be the biggest financial transaction of your life, will you send me a cheque for a couple of grand?

I can understand a person who is adamant to go with BOI for a mortgage despite currently having high rates.

BOI are the healthiest of our toxic banks. The others are still on life support. It is in there interest to get as many healthy customers in now. What better way than using teaser rates to get you in the door. Once your in they can gouge you to make up for there past mistakes. The other banks are like cornered rats. It would be wise in my opinion to avoid them.

A mortgage is a 25/35 year commitment. Making a decision based on current best deals may be a big mistake

I may be wrong. Ireland has a nasty habit of rewarding poor decision making and punishing people who think things through carefully

The_Conductor

Totally ignoring all aspects of your query not directly relevant to whether to fix or go fully variable (which there are many)- its simply impossible to tell whether you'd be better fixing for 2 years- or going fully variable.

Rates- as they stand- at 4.5%'ish variable, 3.8%'ish fixed- could change tomorrow- and could change up or down.

Lots of people focus on the ECB base rate- which is at effectively negative levels- and imagine this means that variable rates can only go in the one direction....... down........ Unfortunately this is ignoring the simple fact- that the vast bulk of operational funds a bank uses- are procured on the bond market- and not directly from the ECB. At present- most of the better Irish institutions can borrow from bondholders at in the region of 2.75-3%. The cost of borrowing for lending institutions is thus in this region. A variable rate of 4.5% indicates a spread of 1.5%. A 1.5% is quite remarkable in financial terms- however, it is on the back of our banking sector bankrupting itself- and merely a reflection of the lending institutions trying to mend their balance sheets.

Are bank bonds likely to go up or down? This is determined by their credit ratings. Irish banks are improving their ratings- so the interest on bank bonds- are likely to fall. Are they likely to fall more than the 0.5% difference between the fixed and variable rates on offer? Seriously- you'd be almost as well off flipping a coin on that question. The Eurozone economy is subdued- but doing far better than many pundits had predicted. Its possible that the current subdued returns banks are able to offer to investors- may rise. They may also fall.

Personally- were I in your position- I would take the 'safe' approach- and fix for as long as possible. Even if it cost me longer term- as an insurance policy- it is worth it. Then again- I'm in my 40s, with young children- and am naturally risk averse. Its your call. Personally I'd fix though.

zagmund

Villa05 wrote: »

A mortgage is a 25/35 year commitment. Making a decision based on current best deals may be a big mistake

If recent years have thought us *anything* it's that long term economic planning is on a par with long term weather forecasting - i.e. it's makey uppy stuff.

Remember when bank shares were blue chip? Financial planning over the previous 50+ years had said that you can't go wrong with bank shares in the long term. Boy did they get that one wrong.

The fact is that the whole economy could go belly up in a couple of years. Or it may not. Or BoI could decide to drop their rate to 1.25%. Or they could go to 12.50%. Or they could do nothing. Good luck to anyone trying to forecast that over 2 years, let alone 20 years.

So, the reality for most people is that they *only* have the short term view to consider as that is all that they can use to factor into their equation before hitting the realms of long range weather forecasting. The only place where the "long" term is certain is with fixed rates, You know exactly what you're getting with them, but it's debatable whether 5 years in a 25 year term can be regarded as "long". After the 5 year fix is up you are back to square one again.

z

griffzinho

I recently took out a mortgage with BOI.

I cannot understand the hate for them. They are the strongest indigenous bank by far and have an attractive stamp duty offer. Their 2 & 3 year fixed rates are 3.8% (<75% LTV), which I consider good value, particularly as the other significantly better value offer (KBC) requires you to switch current account.

To summarise options:

AIB, PTSB, Ulster Bank (RBS) are all majority state owned and their post privatisation mortgage rate policies are unclear.
KBC - I personally prefer bricks and mortar and their rate quoted was the same as BOI at 3.8% fixed for two years.

As for variable rates in the future I feel the only way is down.
The only way the world economy can keep afloat is by making money cheaper and cheaper over time. Keep pumping.

Factors in Ireland are pointing to lower variables rate in 12-18 months imho.

popsy09

As I said before in thread a few times now , I am happy to stay with boi I was asking about interest rates not which bank is better and which bank has best offer

I have all the info I need now so thank you , I am in the bank in the next week and I will have a word with them about the rate I want to choose

Thank you

ted1

Stamp duty on a 200,000k house is 2,000. You will pay more than 2k in additional interest very fast.

murphaph

popsy09 wrote: »

As I said before in thread a few times now , I am happy to stay with boi I was asking about interest rates not which bank is better and which bank has best offer

I have all the info I need now so thank you , I am in the bank in the next week and I will have a word with them about the rate I want to choose

Thank you

Good luck, but really the difference of 1% on a mortgage can be immense, like a new Mercedes Benz immense. Would you fill out a few forms if someone told you you'd get a Mercedes for doing it?

Nobody can say with any degree of certainty that a fixed is better or vice versa but we can say that KBC etc. are offering far better rates in the here and now than BoI.

It's your decision of course, but you are literally throwing tens of thousands out the window if you can get 1% off from another lender and you don't attempt to.

sKeith

Its a crazy backwards world were fixed is 0.5% lower than variable. I went variable because fixed was too expensive, about 0.5-1% more than variable rate (2012). I would very easily go with 2 year fixed with your offerings, but make sure there are no catches.

hognef

sKeith wrote: »

Its a crazy backwards world were fixed is 0.5% lower than variable. I went variable because fixed was too expensive, about 0.5-1% more than variable rate (2012). I would very easily go with 2 year fixed with your offerings, but make sure there are no catches.

Fixed rates will be lower than variable rates when rates are expected to drop. Nothing crazy or backwards about that.

And to those who argue for going with the bank offering the lowest (variable) rate: There's absolutely no guarantee that bank will remain the cheapest long term.

Greyian

hognef wrote: »

Fixed rates will be lower than variable rates when rates are expected to drop. Nothing crazy or backwards about that.

And to those who argue for going with the bank offering the lowest (variable) rate: There's absolutely no guarantee that bank will remain the cheapest long term.

In which case you can switch.

The only thing you can guarantee by looking at current rates is who the cheapest is right now. I can't understand why someone would pay an extra 0.5-1.0% to...avoid filling out a few forms? If a car salesman would give you €10,000 off a car if you filled out your name/address details yourself, instead of him having to ask you for them and write them himself, would you say no?