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Fixed Rate Mortgages

  • 06-03-2019 12:43pm
    #1
    the heathen
    Registered Users Posts: 585 ✭✭✭


    Hi folks,

    Just wondering if anyone could offer a little advice.

    I've just been offered the option of 2,3,or 5 year Fixed Rate Mortgage at 3.7% by PTSB which I'm inclined to take given that I'm currently paying for a Variable at 4.3%. I've looked into switching but can't at the moment.

    What I wanted to ask is...

    1. Why are Fixed Rates lower than Variable at the moment - traditionally it's always been the other way round hasn't it?

    2. Is there any reason not to go with the 5 year fixed? This Examiner article from last year warns against it as the ECB rate is likely to rise but I thought that an ECB rise would affect Variable rates but couldn't affect Fixed?

    https://www.irishexaminer.com/breakingnews/business/fixed-rate-mortgage-warning-on-ecb-rate-rise-861492.html

    I've no doubt the above are probably stupid questions so my apologies for that in advance!


Comments

  • #2
    Wheety
    Registered Users, Registered Users 2 Posts: 5,512 ✭✭✭Wheety


    You're right in that the ECB rate changing may (not necessarily) affect variable rates but fixed do not change for the duration of the fixed term.

    If you think rates will rise, then fix for however long you want.

    But they are awful rates. Are you in negative equity?

    I'm on a 5 year fixed rate at 2.6%. That's KBC so includes a 0.2% discount. Normal rate is 2.8%. That's <60% ltv though.


  • #3
    bluetractor
    Banned (with Prison Access) Posts: 56 ✭✭bluetractor


    That rate is why I would advise anyone from taking a mortgage from ptsb. Great incentives for people to become a customer, but once they have you they rip you off no end and charge top whack.

    OP, if at all possible see if you can switch to a new mortgage bank and get a far better rate.

    Here's an example. Taking 100,000 and 20 years left on your mortgage, for each €100,000, you will be paying €19,700 in interest over the next 5 years. So 200k balance = 39k interest, 300k balance 58.5k interest.

    Lets say you are 90% loan to value, then you can get rates of 3%. Your interest payments per €100,000 balance will be €15,900. So that .7% difference will save you almost €4,000 per each €100,000 balance you have.

    Or lets put it another way - if you have a mortgage balance of €350,000, that's almost €15,000 in your pocket over the 5 years rather than the bank's.


  • #4
    the heathen
    Registered Users Posts: 585 ✭✭✭the heathen


    Wheety wrote: »
    You're right in that the ECB rate changing may (not necessarily) affect variable rates but fixed do not change for the duration of the fixed term.

    If you think rates will rise, then fix for however long you want.

    But they are awful rates. Are you in negative equity?

    I'm on a 5 year fixed rate at 2.6%. That's KBC so includes a 0.2% discount. Normal rate is 2.8%. That's <60% ltv though.

    I'm not in negative equity. LTV is <85%. I spoke to AIB yesterday about a switch and apparently I don't quite fit into their criteria in terms of income etc so I may be stuck with PTSB.

    Thanks for confirmation on Fixed Rates.


  • #5
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Op those rates are desperate. I certainly would not tie into a 5 year fixed at 3.70%. Did they offer you a loan to value rate? I would be happy to check if you qualify to switch to other lenders as they all differ and the 3.5 times income do not apply to switchers. You need to pm me some details.

    the heathen wrote: »
    I'm not in negative equity. LTV is <85%. I spoke to AIB yesterday about a switch and apparently I don't quite fit into their criteria in terms of income etc so I may be stuck with PTSB.

    Thanks for confirmation on Fixed Rates.


  • #6
    bluetractor
    Banned (with Prison Access) Posts: 56 ✭✭bluetractor


    the heathen wrote: »
    I'm not in negative equity. LTV is <85%. I spoke to AIB yesterday about a switch and apparently I don't quite fit into their criteria in terms of income etc so I may be stuck with PTSB.

    Thanks for confirmation on Fixed Rates.

    Go to a broker. They'll tell you immediately who will be best to approach.

    80% LTV and you'll get a 2.85% rate with kbc (2.65% if you move your current account to them)

    Same calculations - per 100k, 5 years Interest = €14k. 6k per 100k balance saving. (the 3% 5 year figure in post above has been corrected - I left out one year's interest)


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  • #7
    the heathen
    Registered Users Posts: 585 ✭✭✭the heathen


    Trish56 wrote: »
    Op those rates are desperate. I certainly would not tie into a 5 year fixed at 3.70%. Did they offer you a loan to value rate? I would be happy to check if you qualify to switch to other lenders as they all differ and the 3.5 times income do not apply to switchers. You need to pm me some details.

    Hi Trish,

    Thanks a mil for the offer. I've tried to pm you and the message appears to have sent but then doesn't seem to be in my Sent Items.

    Can you let me know if you got it? And if not, maybe fire me a pm and I'll reply to it.

    Thanks a mil


  • #8
    the heathen
    Registered Users Posts: 585 ✭✭✭the heathen


    bluetractor wrote: »
    That rate is why I would advise anyone from taking a mortgage from ptsb. Great incentives for people to become a customer, but once they have you they rip you off no end and charge top whack.

    OP, if at all possible see if you can switch to a new mortgage bank and get a far better rate.

    Here's an example. Taking 100,000 and 20 years left on your mortgage, for each €100,000, you will be paying €19,700 in interest over the next 5 years. So 200k balance = 39k interest, 300k balance 58.5k interest.

    Lets say you are 90% loan to value, then you can get rates of 3%. Your interest payments per €100,000 balance will be €15,900. So that .7% difference will save you almost €4,000 per each €100,000 balance you have.

    Or lets put it another way - if you have a mortgage balance of €350,000, that's almost €15,000 in your pocket over the 5 years rather than the bank's.

    They're stark figures Bluetractor. They were the only option for me ten years ago (and might still be - but I'll certainly go to a broker and see what can be done).


  • #9
    Trish56
    Registered Users, Registered Users 2 Posts: 1,256 ✭✭✭Trish56


    Hi OP,
    I did receive your PM and replied to you.
    the heathen wrote: »
    Hi Trish,

    Thanks a mil for the offer. I've tried to pm you and the message appears to have sent but then doesn't seem to be in my Sent Items.

    Can you let me know if you got it? And if not, maybe fire me a pm and I'll reply to it.

    Thanks a mil


  • #10
    BadSanta
    Registered Users Posts: 53 ✭✭BadSanta


    Trish56 wrote: »
    Op those rates are desperate. I certainly would not tie into a 5 year fixed at 3.70%. Did they offer you a loan to value rate? I would be happy to check if you qualify to switch to other lenders as they all differ and the 3.5 times income do not apply to switchers. You need to pm me some details.

    Hi are you working on a broker company? I'm starting to apply mortgage by monday will try to get some adviced. Can you help? Thanks


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