Fixed Rate coming to end

We're in the same boat coming to the end of a 5 yr term. We're going to leave it on variable for 6-12 months and try and lock in a fixed rate when they improve. (we're obviously taking a risk that rates will go down but that was our decision based on initial thoughts and then subsequent professional advice received.)

ECB rate will start falling in June. However, quite unusually, the current mortgage rates here bear no resemblance to ECB rates due to the high level of deposits and the low deposit rates.

Hence a variable rate almost 1% BELOW the ECB rate.

I would definitely take the variable rate. This is very flexible and if you see fixed rates drop towards 3% , you can switch to that immediately. But that's unlikely until next year.

But don't expect the 3.55 rate to drop at any point until the ECB is at 2% - and that could take a couple of years or more.

Avant is doing lifetime fix @3.95.

I doubt rates will drop as much as people think.

Aus/NZ were the first CB to raise rates back in 2022 when everyone else was still running QE, ie the canary in coal mine. There is talk the next move could be up again there instead of down. Rest might follow again….

https://www.interest.co.nz/economy/126306/anzs-sharon-zollner-says-reserve-bank-could-shock-new-zealand-lifting-official-cash#:~:text=ANZ's%20Sharon%20Zollner%20says%20the,50%20basis%20points%20to%206

Get your point but banks will come under pressure to undo rate increases they imposed

If they imposed all the ECB rate increases, the standard variable rate would be 6%-6.5% at a minimum. In the UK where the Bank of England is 0.75% higher than the ECB, the average standard variable rate is a whopping 7.5%, but you can get 5 year fixed for about 5%.

You can thank the inertia of the tens of thousands of customers with deposits in the banks earning 1% or less and not making a tiny little effort to move their money to a high interest account where they would get close to 4%. It is because of these low rate deposits that the banks can offer some of the lowest mortgage rates in Europe (never thought I'd say that!!!)

They will not / cannot drop these deposit rates even if the ECB rate drops, hence there is virtually no chance of any downward movement in variable rates that are in the 3.5-3.7% area for the next 18months - 2 years - but be thankful those rates are available.

We are close to drawdown. Going to fix for 5 years. Better the devil you know :)