# breaking out a fixed rate mortgage



## Apollo

hi..I bought a house 6 months ago for 280k. Mortgage, 92%, was 256400 based on a 3 yr fixed of 5.25%. I would like to take advantage of the lower interest rates that are now out there but am fearful of what the breakage fee would be. It looks like I could get a rate for 3.85% variable on the open market today. Does anyone know what the potential breakout fee could be?


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## NorfBank

Depends on lender, only way to find out for sure is to call them.


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## irishlinks

It is likely that your house value ahs decreased - so the LTV will now be more than 92%. It will be hard to find anyone lending over 92% of the value of the house. Your current lender may let you swap over to their variable rate though. Did you find out what the penalty would be yet?


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## Deisce

I'm in same boat. Fixed my mortgage 21 Jun 07 for 3 years at 5.05%. I borrowed 345,000 in 2006 for 35 years. Due to family bereavement I have a lump sum I want to use to pay off some of the mortgage. I will call Permenant TSB to see how much it will cost to change to variable and what variable is.


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## Deisce

Deisce said:


> I'm in same boat. Fixed my mortgage 21 Jun 07 for 3 years at 5.05%. I borrowed 345,000 in 2006 for 35 years. Due to family bereavement I have a lump sum I want to use to pay off some of the mortgage. I will call Permenant TSB to see how much it will cost to change to variable and what variable is.


 
No penalty. Rate quoted was less than fixed rate for Jan 2009 (~4.65%). the no penalty makes me suspicious though. Anyone have any comments?


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## chrisboy

I got out of mine for no penalty.. Was fixed at 5.18%, now on the aib variable..


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## Hasslehoff

I have a First Active mortgage , fixed at 5.25 ( amount left is €420,000) with three and a half years left to go and they want €11.5 k (as of last week) to let us out of the fixed term agreement. Can anyone advise on this ?


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## ClubMan

Try haggling? But they presumably have every right under the terms & conditions of the loan agreement to insist. So then it's a case of weighing up the costs if breaking out versus the possible savings achievable by switching to another (variable or tracker) rate. Try Karl Jeacle's mortgage calculator to estimate these.


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## giblet

Hi Hasselhoff

I have 2 fixed rate mortgage with First Active at 5% , I contacted them to find out what penalty I would have to pay to exit redeem both mortgages. They immediately quoted me 6 months interest for a redemption penalty which equates to 12000€ in total. Based on advice I received here I then asked her to forward to me my contract details highlighting where exactly it states that I must pay 6 months penalty. 3 days later I received an update from the bank stating that they "reviewed" the case and waivered the penalty. They also never forwarded me the contract details stating I would have to pay 6 months interest for each mortgage. 

Interesting, I wonder is the 6 month thing pulled out of a hat and because I queried the contract they backed off. Perhaps your quote is plucked from the sky too and really is open for negotiation as clubman mentioned

Because of no penalty I have currently asked if I can go back onto the tracker mortgage I was on before fixing, awaiting their response and will post it . Anyone ever moved from fixed back to tracker and stayed with the same bank ??


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## Mayo Money

I spoke to someone recently who were in a 10 year fixed at 5.25% with ptsb.  they were able to break out of it without penalty as the variable rate  they were switching to was higher than the fixed rate.


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## rgfuller

giblet said:


> I have 2 fixed rate mortgage with First Active at 5% , I contacted them to find out what penalty I would have to pay to exit redeem both mortgages. They immediately quoted me 6 months interest for a redemption penalty which equates to 12000€ in total. Based on advice I received here I then asked her to forward to me my contract details highlighting where exactly it states that I must pay 6 months penalty. 3 days later I received an update from the bank stating that they "reviewed" the case and waivered the penalty. They also never forwarded me the contract details stating I would have to pay 6 months interest for each mortgage.
> 
> Interesting, I wonder is the 6 month thing pulled out of a hat and because I queried the contract they backed off. Perhaps your quote is plucked from the sky too and really is open for negotiation as clubman mentioned


 
A few years ago I was on a 5year fix (on a 30yr mortgage) with First Active (this was prior to the UB takeover of them), the terms of the mortgage which I had copies of and read through stated that a payment of 6 months interest was required to break the fixed term. I did the sums (as suggested above) back then and decided the savings on switching weren't worth it at the time.


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## Petal

Just to add my two cents - I've been onto PTSB regarding breaking the fixed rate (1 year left). I'm fixed at 4.85, they offered me 4.65 varibale rate and no penalties. So I asked them if I wait till fixed rate expires will I go back onto my original tracker and they said yes i will fall onto the tracker available at the time my fixed rate expires. I have to do some calculating, but I'm pretty certain I'll be better off sitting out the year and falling back onto a tracker rather than going on a variable now.


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## irishlinks

Petal said:


> Just to add my two cents - I've been onto PTSB regarding breaking the fixed rate (1 year left). I'm fixed at 4.85, they offered me 4.65 varibale rate and no penalties. So I asked them if I wait till fixed rate expires will I go back onto my original tracker and they said yes i will fall onto the tracker available at the time my fixed rate expires. I have to do some calculating, but I'm pretty certain I'll be better off sitting out the year and falling back onto a tracker rather than going on a variable now.



Depends how much the PTSB tracker is above the ecb. They don't offer new trackers . Can you find out what tracker rate you would go onto now if your fixed rate ended today?


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## Petal

Well, I assumed I would fall back onto the one I had before fixing which was ECB+1.1, but you're right, I should ask!


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## shootingstar

Very interesting thread. I`m with UB. fixed rate for 5 years back in aug 07. Will def give them a call today to see whats what. Im fixed at 4.95%


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## foxy21

I am in a 2 year fixed with PTSB until Nov 09 @ 5.2%. Just called them and they advised there will be no penalty to change to an LTV variable. They stalled this for 20 days which means if I send letter to change terms within 20 days there will be no penalty. If I do so after 20 days it may be subject to penalty and I have to ask again to confirm. btw LTV variable is 4.65%


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## foo

Just rang ebs today to see about breaking fixed motgage. Fixed at 4.75 and only 1 year left ( Fixed for 3 ). Would cost 9000! I nearly fainted especially since I knew that ptsb are not charging. Variable rate would be 4.18 so don't think worth it.


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## bmm

Yes the EBS have turned out to be the worst crowd to deal with. Considering the bailout they are getting from Irish Taxpayers and also considering the society is supposedly owned by it's members. They are by far the least forgiving of all the Irish mortgage lenders.  EBS= "Exceptionally Brutal Service"

I have 144k loan with them fixed for another 3 years at 4.88% . They are looking for 6.6k breakout fee. 

This is the Topup portion of this investment mortgage so if house prices get any worse they'll be getting the keys to the property and they can go and stuff the breakout fee along with the other couple of hundred thousand onto the toxic asset sheet!


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## fcdub

I think this was asked before but not answered.

Is anyone suspicious as why ptsb and some of the other banks are letting us out of our fixed mortgages?

Whats the logic for them?

Is it possible that they plan to increase their variable rates and not pass on decreases in the ECB?

I really dont know whats in it for them.  I have 2.5 years left on my fixed mortgage at 4.9% and they are letting me out free.  why????


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## irishlinks

fcdub said:


> I think this was asked before but not answered.
> 
> Is anyone suspicious as why ptsb and some of the other banks are letting us out of our fixed mortgages?
> 
> Whats the logic for them?
> 
> Is it possible that they plan to increase their variable rates and not pass on decreases in the ECB?
> 
> I really dont know whats in it for them.  I have 2.5 years left on my fixed mortgage at 4.9% and they are letting me out free.  why????



Mybe it's because the PTSB variable rate is no lower than the fixed rate you are on - so they don't mind you breaking the fix. Other lenders variable rates are lower - so people coming off a fixed rate will cost them more.


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## fcdub

they are offering us 4.05%......


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## David_Dublin

I was quoted 7,222 by AIB as of today, dont have that kind of money hanging around. It took them over a week to get the quote to me so clearly they are receiving one or two other requests like this.

Mf - what was I that Dellboy used to call Rodney?


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## happygoose

I just used Karl's mortgage calcuator to work out what switching to a variable rate would save me - €200 a month - from switching from a 5.44% fixed to a 3.68% variable...

..only problem is that I'm with EBS  

I'll send them a letter anyway!


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## Grovegirl

foo said:


> E-mailed chief exe of ebs in relation to charging breakage fee when others are not.... still waiting for response! Just found out today that IIB are not charging breakage fee. Will defo change mortgage provider when finished fixed rate if I get no where with EBS but I will keep trying. I think in current climate when we are all taking a pay cut the banks should be more understanding. I'm not asking them to cancel my debt!!


 
Where did you hear that IIB are not charging the breakage fee??

I've been quoted €20k to get out of my fixed rate from them last week!!


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## Bright Star

Hi all,

I have just joined this website as i have found comments very Interesting. I am with EBS also and had meeting with Manager last week on the issue of breaking out of a Fixed Rate. I have 5.2% (2.5 Years Left) on a 3yr Fixed. He quoted me €15,500 to break it!!!!!!!!!! Ill nearly passed out there and then as i had heard that a number of people are able to do  this breakage with no penalty with PTSB and the likes??? What is the deal with EBS!! I could be saving €405 per month in interest on mine.  I know its my own fault--i did sign up for it..but given our current economic state..things are getting very tight and any saving will help and €405 is nothing to turn your nose up at.
Do u think emailing Exe of EBS might get us some response???


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## foo

I read on another web site about IIB not charging breakage fee. Maybe letting some people break and not others. Still no reply from EBS. Next move is to ask for copy of contract I signed as I have no copy and a detailed quote of how they come up with fee.


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## dubrov

learly the reason why some banks are letting some people out of their fixed rates for free and not others is down to the terms of there mortgage.

Banks will only let you out if it is in their benefit.

e.g. You have a 35 year mortgage on a 3 year fixed at 5.05% which rolls to a tracker, say ECB+0.75% afterwards. I'm sure the banks are begging people to switch to a variable rate. The mortgage holder saves a bit for a couple of years but ends up paying much more for the remaining 32 years of their mortgage as Variable rates are currently way above the tracker rate and will ontinue to be so for the forseeable future. You can switch banks but since the credit runch no other bank will offer anything close to ECB+0.75%.

Bottom line is banks will only let you switch for free if they feel they are making money.They basially value your mortgage on your current deal, revalue it on the switch and if the switch is worth more to them they will offer it for free.

Just make sure to read your ontrat thoroughly and make sure they explain all the differences between your current and proposed mortgage contract


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## Dinarius

Chrisboy (post #9),

I note that you're with AIB and got out of a fixed without penalty. How?

We're on a five year fixed ending November 2011.

Right now we owe €267k paying €1963 per month.

We want to add about €150k after extending the house. So, total borrowings then will be about €400-420k.

Breakage cost at the moment is nearly €7k. 

We are cast iron, credit wise. Can we negotiate this? After all, we could say OK, we'll pay the €7k to close out, but we'll take the €400k elsewhere.

Any suggestions? 

Thanks.

D.


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## dubrov

Dinarius, I think I remember from my mortgage contract that the calculation is set in stone. I think it is defined by the regulator.

I also saw this post which provides some more detail.

http://www.askaboutmoney.com/showthread.php?p=749000

Seeing as you have about 3 years left, you're basically looking at the difference between your current rate and AIB's current 3 Year fixed rate over the next 3 years.

Zoo_lander, generally they say in the offer how long it is good for in an offer letter. If the drawdown was before the expiry of the offer then I think the ombudsman will back you up. I'd be careful messing with your credit rating though. It might have implications that you weren't aware. THe bank definitely won't repossess if you continue paying off at the 5.05% level but remember the anything you don't pay will just be added to the debt.


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## chrisboy

Dinarius said:


> Chrisboy (post #9),
> 
> I note that you're with AIB and got out of a fixed without penalty. How?
> 
> We're on a five year fixed ending November 2011.
> 
> Right now we owe €267k paying €1963 per month.
> 
> We want to add about €150k after extending the house. So, total borrowings then will be about €400-420k.
> 
> Breakage cost at the moment is nearly €7k.
> 
> We are cast iron, credit wise. Can we negotiate this? After all, we could say OK, we'll pay the €7k to close out, but we'll take the €400k elsewhere.
> 
> Any suggestions?
> 
> Thanks.
> 
> D.




Hi, i'm not a 100% sure why i didnt have to pay a penalty, the only thing i can think of, was i rang them to get it put on fixed rate, then sent in a written request which was accepted, but i never sign a contract to put me on fixed rate, so nothing was in writing except for my request.. Not sure if this is the reason, maybe someone could confirm this could be the reason..


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## David_Dublin

chrisboy said:


> I got out of mine for no penalty.. Was fixed at 5.18%, now on the aib variable..


How did you go about it. What term was left on your fixed rate and what rate was it at. I'm with AIB too and I was quoted over 7K, I wonder are they making arbitrary decisions or are your circumstances different than mine or something. Thanks.


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## CL32

Hi all.

I have about 3 years left on a fixed term with EBS. When this term is up will I automatically revert to the tracker I was on before, or will they try and switch me to a variable rate?


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## NorfBank

Depends on what it says on your loan offer. It will say whether you revert to a tracker or variable rate.


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## tw0nk

Just got off the phone from ptsb and as of yesterday 11/2/09 they have "withdrawn the option for customers to change from fixed to variable rate mortgages".

Discussed my options with him and he said they offer 3 month moratoriums and interest only periods on mortgages but no way of going to variable/lower rate.

Only option to go to lower rate looks to be switching mortgage providers for ptsb customers, anyone have any idea of a way to find out costs of this without ringing up several banks?


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## PaddyW

You'll have to find out from PTSB how much it is to break your fixed rate first. If you can afford this then you can switch your mortgage provider after. Some banks will pay legal fees for you.


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## Watcher

I'm on a 2 year fixed at 4.75% with PTSB. I rang them about 2 weeks ago and asked could I move to variable. They agreed and moved me once I sent it in writing within 20 days. 
Now that Im on variable I have a meeting with AIB to discuss transferring to them.


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## NorfBank

Watcher said:


> I'm on a 2 year fixed at 4.75% with PTSB. I rang them about 2 weeks ago and asked could I move to variable. They agreed and moved me once I sent it in writing within 20 days.
> Now that Im on variable I have a meeting with AIB to discuss transferring to them.



Just be careful that your fixed rate doesn't revert to a tracker rate at the end of the fixed rate period.
A bank doing something for free sounds fishy. 
Call me cynical.


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## PaddyW

I agree with Norf. Wasn't aware that my fixed rate would revert to variable at end of fixed term until I read the T&C's. Have a look through them, if you have them. If not get a copy off the bank.


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## Maximus152

PaddyW said:


> I agree with Norf. Wasn't aware that my fixed rate would revert to variable at end of fixed term until I read the T&C's. Have a look through them, if you have them. If not get a copy off the bank.


 
Why would it not revert back to a variable, the Fixed rate term is over so only other way is to revert default variable..? I am missing something here, I assumed we are variable unless we request fixed.


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## NorfBank

I think PaddyW meant his reverted to a tracker? Some older fixed rates reverted to a tracker while some revert to a variable rate. It may be better to take the hit now of a fixed rate for the benefit of a tracker in the future.


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## Maximus152

Yes I know, what is best value at present an ECB tracker or a variable rate, with out going into future economis speculation I have a belly full of that, I assume Tracker, lets say on a 1000 per month mort?


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## NorfBank

Some would argue that you have to look at the margin on the tracker.
At the moment the best variable is 3.25% which is 1.25% above the ECB. This would be equivalent to an ECB + 1.25% tracker.

Personally I would prefer an ECB + 1.75% (3.75%) tracker to a 3.25% variable as you are guaranteed all future interest rate reductions on the tracker plus you will know exactly by how much the tracker may increase. Your rate will not be decided by the financial situation at your lender.


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## Maximus152

Okay well explained Norfbank, so in another direction, which would a bank rather you had with them on thier books an ECB (even if off the menu) or a Fixed/Variable morgage rate, than I would do the reverse obviously!


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## NorfBank

Banks would rather have you on a fixed rate or variable as on either of these money supply shouldn't affect them. They have locked in a rate when the customer goes fixed and with a variable, if the cost of borrowing money increases they can just increase the variable. On a tracker they cannot increase the cost to the customer until the ECB raises the base rate.

This can be evidenced by the fact that some lenders are allowing customers on fixed rates reverting to tracker rates to break out of the fixed rate without penalty.


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## Maximus152

Thanks Norf. Vixen I am on a tracker, I do not want to loose it. I have a 2nd home which I rent in my home town have in 10 years was willed to me and brother and I borrowed and bought him out (old 3 bed). Anyways I put that on a interest only, and my own home was on tracker. Now the interest only)mort (2nd home) has ended Im paying way more (house is nt worth it). The banks would only let me change back to interest only on 2nd home for 1 year if I came off Tracker mort on my own home... why I never knew.


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## Watcher

Quote:
Originally Posted by *Watcher* http://www.askaboutmoney.com/showthread.php?p=807172#post807172 
_I'm on a 2 year fixed at 4.75% with PTSB. I rang them about 2 weeks ago and asked could I move to variable. They agreed and moved me once I sent it in writing within 20 days. _
_Now that I'm on variable I have a meeting with AIB to discuss transferring to them._

Bronte: I'm not sure about this (and I'm not a fan of the banks) Aren't the PTSB being very good to you so why would you switch or am I missing something. 

Watcher : 
Reason Im switching to AIB is that the PTSB moved me from 4.75% fixed to 4.15% variable. I can get a much lower variable rate from AIB (3.4% variable) and they have also offered me the option of 2.8% 2 year fixed.


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## dubrov

Bottom line all is that banks will not let you switch for free from a fixed to a variable unless it is in their interest to do so. Banks aren't doing this as you are a valued customer or because they want to help you out. 

Tracker rates at the peak were about +.75% while variable rates are on average about +2% at the moment. Be very careful you don't switch from fixed to a variable to save a couple of percent for a couple of years only to end up paying 1% or more extra a year for the remaining 20 odd years.

I would make sure to ask them what you are giving up from your current contract by switching and get it in writing so that if there is something you missed then at least you might have some recourse.

To be honest, I can't see any reason to ever switch from a fixed to a variable rate. AS far as I can tell, the bank will just charge you what it is losing out on and then maybe some administration fee on top.


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## Petal

Well, I've said this in other threads already, but I asked PTSB a while ago about breaking out of my fixed rate (4.75) and penalties involved, they said I could break out, no penalties and go on a variable of 4.65 (at that time). I then asked about would I fall back on the tracker if I stayed on the fixed and they said yes, but the tracker wasn't available if I broke the fixed rate. I checked my loan agreement and it does indeed say that I would revert to tracker (but I have to instruct them thereof).


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## CleoD

Very interesting topic, I am currently in the middle of switching from PTSB to AIB. I am fixed at 5.5% for 5 months until end July 2009. I got a figure 21 Jan €454 to exit and 4 weeks later after a .5% reduction in variable I was given a fee of €1566. Can't believe some people have been quoted zero, anyone know how I can get that. I am having some trouble getting the information on how they came up with these fees and will be fighting them, getting the documents from my solicitor to see what it says there about an exit fee.


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## agapanthus

apparently according to yesterdays paper it is because of an error in their computer system that people are being quoted no penalty, paper said they have suspended letting people break fixed rates until they fix the system to reflect the correct penalties.  Also said all quotes given out in writing will be honoured.


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## Ret45

I have a tracker mortgage, currently at .7% above ECB rate. 

I am very strongly considering moving to a 10 fixed rate at around 4.5%. 

The US and Europe are drowning in a sea of debt. This debt will have to be paid off and devaluation and inflation is the time honoured way of managing this. At some point point over the next 10 years I expect inflation and interest rates to rise sharply - rates of 20% are possible given the level of money printing which is now taking place by the Fed.  

If you are already on a fixed rate you should consider keeping it. Rates may go down one more time, after that the only way is up.


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## chrisboy

Ret45 said:


> I have a tracker mortgage, currently at .7% above ECB rate.
> 
> I am very strongly considering moving to a 10 fixed rate at around 4.5%.
> 
> The US and Europe are drowning in a sea of debt. This debt will have to be paid off and devaluation and inflation is the time honoured way of managing this. At some point point over the next 10 years I expect inflation and interest rates to rise sharply - rates of 20% are possible given the level of money printing which is now taking place by the Fed.
> 
> If you are already on a fixed rate you should consider keeping it. Rates may go down one more time, after that the only way is up.




I'd sell my soul for a tracker, ecb +.7%!


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## TrackerThieves

just thought i'd bump this old thread from october 2008  intresting reading given what we know now


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