# hold on to fixed rate or go variable ?



## falabo (2 Mar 2009)

Hi there

 may I seek some advice from you guys?

Mortgage:
265,000 in august 2007

3 year fixed rate at 4.99% rolling to ECB +1.1%

Lender: PTSB

Would you switch to a variable rate now or wait until I roll onto ECB tracker? (no penalty for switching to variable, I'd say they want me to give up the ECB tracker as if I do go variable the ECB tracker will no longer be available to me)

Please advice, really don't know what to do...  Thanks all.


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## Kine (2 Mar 2009)

*Re: hold to to fixed rate or go variable ?*

I am in a similar position. I roll onto an ECB +1.05 in November this year. I'm taking the pain now to get that when it happens as I'm hopefult ECB will be c.1.5% at the time. But, I can afford to take the pain, I don't know your personal situation, so you need to sort out what you can or can't do.


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## Dreamerb (2 Mar 2009)

*Re: hold to to fixed rate or go variable ?*

It looks like their variable rates are more than 2% over ECB at the moment, and it's hard to see those margins reducing much any time soon. That means the cost to you of keeping the fixed rate is probably close to €2k a year (and that extra cost will increase as interest rates go down further over this year). 

The problem is that it's very difficult to forecast how the broader economy and interest rates will go over the next couple of years, and 18 months is the critical time horizon for you. You could reap the short term advantages (probably to the tune of €4k or so over 18 months - gross saving, will be reduced by lower mortgage interest relief if you're an FTB) by breaking out now... but no matter what, there's very likely to be a longer term cost. 

If you're not currently under financial pressure, waiting for the tracker to kick in may be of benefit - I reckon trackers at that margin are unlikely to come back in for many years (if ever), so there's likely to be a substantial long term advantage. 

If you are under financial pressure, it might make sense to have the additional money now. 

Only you can make that assessment. I'd try to hang in there, but it's not a decision to make lightly either way.


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## NorfBank (3 Mar 2009)

How many years do you have left on the mortgage?

If you have a long time left i.e 25/30 years then it would make sense to take the pain now for the long term value of the tracker.
If you have only a short term left of around 5/10 years then breaking now may make more sense.

I would agree with Dreamerb though, if you under financial pressure and you may miss a payment by staying on the fixed rate then come off it and give yourself some breathing space. The most important thing is to keep your credit record clean so as not to have to go sub prime in the future.


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## falabo (3 Mar 2009)

thanks for our advice, it's a 35 year mortage repaying 1095e after TRS at the moment with combined salries of 68k so plenty  under no pressure, we're even saving 500-700 per month as we have no loans or credit cards ...


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