Are fixed rates automatically increased along with variable rates ?

[phantom60]

As everyone seems to be pretty certain that the ECB rate is going to be increased next month I'm considering moving from variable to fixed before this increase happens.
I've been offered a 2yr fixed of 4.8% or 3yr fixed of 5.1% with Ulster Bank.

I know that when the ECB rate is raised this is going be passed on to all Variable rate holders......What I'd like to know is - will this increase also be added on to any new fixed rate offers they make ?
E.g. if there's an increase of 0.5% next month and I look to fix then, will I then be offered a 2yr fixed of 5.3% or 3yr fixed of 5.6% ?

Thanks in advance.

 

[NorfBank]

I know that when the ECB rate is raised this is going be passed on to all Variable rate holders......

This is not necessarily true but is likely. The only ones that are certain to be affected by the ECB are tracker rates holders.

As for fixed rates, these are changed as and when the banks wish, regardless of the ECB.

[broken link removed]

 

[phantom60]

Thanks Norfbank.

That leaves me with more to think about so.
I'd like to hold out for as long as possible without fixing, but I also don't want to end up on a highter fixed rate because of this.
Is this what you call trying to 'time the market' ? I know you've advised against it before on other threads.

 

[NorfBank]

I'd like to hold out for as long as possible without fixing, but I also don't want to end up on a highter fixed rate because of this.
Is this what you call trying to 'time the market' ? I know you've advised against it before on other threads.

Timing the market is choosing a fixed rate over a variable just because you think fixed rates will increase instead of looking at your personal situation and deciding that a fixed rate is the best option for you.

It looks like you are going to fix in any case. Fixed rates are not going to drop. You might as well fix sooner rather than later. I don't see the point in running the risk of UB raising their fixed rates just to save a couple of hundred euros over the next few weeks by sticking with the variable rate.

Up until to a few weeks ago, it was a no brainer to fix if you were on a variable rate. Now it requires some scrutiny again as there is not much value out there in fixed rates, if you ask me.

Would you be interested in staying on the variable but overpaying your mortgage at the level of the fixed rate?

You get the flexibility of the variable rate allowing you to take advantage and pay off the capital while rate are low. If rates jump you already have a buffer. This is only recommended if you can afford interest rate increases, if you will be overstretched by rate increases then you should fix.

Hope this helps.

 

[phantom60]

Up until to a few weeks ago, it was a no brainer to fix if you were on a variable rate. Now it requires some scrutiny again as there is not much value out there in fixed rates, if you ask me.

My thinking was that UB weren't as likely as the Irish owned banks to increase their rates. So I totally was not expecting their recent increase before the ECB rate changed.

Thanks for your help Norfbank.

 

[Bronte]

Would you be interested in staying on the variable but overpaying your mortgage at the level of the fixed rate?

.

Your post is excellent for the current rates but this in particular would be a good idea for Phantom.

Phantom rates are only going one way. Banks are trying to price people out of the fixed rate market.

 

[phantom60]

Your post is excellent for the current rates but this in particular would be a good idea for Phantom.

Phantom rates are only going one way. Banks are trying to price people out of the fixed rate market.

Thanks Bronte.

Does this mean you'd expect there to be little difference between fixed and variable rtes in a couple of years ?