Mortgage interest rate increases.

B

Berneseduke

Registered User
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Hi all,

I've searched the forums here and did some research on google, but would like to open a discussion. My question is, when do people think interest rates will start increasing? Its all being somewhat good news stories in the last year with some banks finally dropping their interest rates, and in some cases twice. Which is great!

I understand that this can be very difficult to predict but would just like to get peoples opinions.

I apologise if this has already been discussed and i missed it.
 
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Berneseduke said:
jsut like to get peoples opinions.
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Peoples opinion's on this issue will be no more accurate than your own. Rates in general will start increasing when the EU rate of inflation begins to grow and ECB increases interest rate. This may be in 1 or potentially up to 4/5 years time. Also the further question as to whether SVR rates in respect of mortgages will be increased in line with ECB rates remains unanswered.
 
I agree with your comment Brendan, but some people might just be more educated in the area than me. I'm just in the process of trying to decide on whether to overpay a mortgage, so trying to decide how interest rates might go, how inflation will go, will salary increases keep up with inflation...etc... it all plays a part in deciding.
 
Berneseduke said:
I agree with your comment Brendan, but some people might just be more educated in the area than me. I'm just in the process of trying to decide on whether to overpay a mortgage, so trying to decide how interest rates might go, how inflation will go, will salary increases keep up with inflation...etc... it all plays a part in deciding.
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You'd be far better off posting your financial situation and working out from that whether overpaying your mortgage is a good idea or not. In relation to experts. Look at Ireland 2000 - 2007 and see how right all the experts got it !

There's talk the Americans might raise interest rate a bit, I was listending to the BBC this morning and the presenter said something along the lines of if it goes up half a percent that's a doubling and the 'expert' totally dismissed this as being important. But if you're paying 2% and it goes up by 1% that's a lot. If you're paying 9% and it goes up 1% it's not a lot.
 
If you are on a SVR then overpaying makes sense provided that you are doing so in the full knowledge that you will have no further access to these funds. If you are on a low tracker then there is little point in overpaying at this stage. Even the best economic minds can have no concept on timing of future interest rate increases or inflation as there are too many imponderables that will affect both issues. base your decision on the rate issue and your current ability to overpay v's need to put funds by for a rainy day!
 
Berneseduke, what interest rates you are talking here? The ECB base rate or the Irish banks' rates? The pundits in europe seem to think that the ecb rate will stay low near zero or so for a year maybe longer as the european economy is in a really bad shape still. Of course who knows, it may go up regardless as brendan above suggested. This only matters if you have a tracker.

If you asked about the irish banks (non) tracker rates, they decoupled from the ecb rate in mid 2010 and we are not entirely sure what drives them now. Some people argue that they are so high because of a high rate of defaults, others think they are so high because the banks exploit the opportunity when there is no competition. Many svr holders still hope that the banks will reduce their rates because they are too high whether or the not the ecb rates stay low or go up again.

I categorically disagree with your assertion that it was all good news lately with some banks reducing rates. In fact I feel totally depressed and hopeless even: when we began this year hoping for the govt to press the banks into reducing their rates there was a lot of noise about it, with Brendan Burgess admirable effort to bring the issue to the fore, with Noonan promising meetings and reviews... And now, end of year, and nothing, still the same rates, or marginally lower in some banks.

Why not overpay if you can regardless, you would be free from debt sooner?
 
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Brendan and Bronte, thank you. It was when reading though data/Blogs etc on line the thoughts on trends of the interest rates came into my head. I didnt really see trends on how it was expected to go over the next few years. With regards overpaying mortgages there are some great discussions on this site already, which I'm sure ye have already contributed to. Taking all into consideration, with current bank deposit rates, DIRT, pension scheme taken into account, rainy day fund etc.... paying extra into the mortgage is a good way to get "4% risk free return as such" (I use those words loosely).

Visigoth, I understand now, ok, so the banks variable and ecb rate are not linked any more as such, as as you said, who knows how it will go, ecb goes up... banks may follow.... ecb stays the same... banks may go up!
 
Just wondering has anyone updated their thoughs on likelihood of mortgage rate increases, decreases or remaining stable at currrent rates ?
We're on an AIB variable rate of 3.55% (APR 3.6%) and I see the fixed rate offering from AIB is around 3.5-3.65%. Happy enough to stick with variable for now but doubtful if rates will fall further ? Any thoughts ?
 
Woodville56 said:
Just wondering has anyone updated their thoughs on likelihood of mortgage rate increases, decreases or remaining stable at currrent rates ?
We're on an AIB variable rate of 3.55% (APR 3.6%) and I see the fixed rate offering from AIB is around 3.5-3.65%. Happy enough to stick with variable for now but doubtful if rates will fall further ? Any thoughts ?
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European interest rates will not increase any time soon, as the Eurozone is still in danger of deflation, Mario Draghi has said as much.
 
When Frank Money gets CB approval and competition sets in variable rates should fall especially for low LTV's
 
I'm figuring they will fall further in the coming 12 months. But no harm in fixing for a year if that rate is 0.5% or thereabouts lower than any variable rate your currently on.
All my opinion of course
 
Given the level of debt (government and personal), interest rates will have to stay low for a long time, maybe a generation.
 
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