Haven 10 year Fixed Mortgage Rate

O

Oriel27

Registered User
Messages
36
hi,
i am currently with Haven. I built a new house 2 years ago (all in finished at 107 euro square foot).

4 months ago i switched from 3.5% to Havens 2 % fixed rate for 4 years. i paid about 1300 breakage fee. My broker had initially set me at 3.5%.

lately, im seriously thinking about exiting out of this 4yr fixed and go for the 10yr fixed at 2.85% (i dont think the 10 year was available until lately). Its going to cost me 70 euro a month extra.

i have 25 years left on mortgage, theres about 175 K left on it (i had a large deposit to build).

anyway, im wondering, what happens after my 4 years are up, if in the meantime the ECB raises rates by 2%, is this 2% proportionally added onto each of the rates the back has? (for example, is 2% added onto the 2.85% 10 year, so in 4 years a 10 year would be 4.8 %?

im sick about this, dont know what to do.
ive a young family, for the sake of 70 euro extra a month, i think i might opt of the 10 years.

looking at the mortgage graph over the last 30 years, 2.85% for 10 years appears low, and mortgages can go much lower.

thanks
Oriel
 
Fixed mortgage rates do not exactly follow the ECB rate.

The ECB rate is a short-term rate.
So variable rate mortgages tend to track/follow the ECB rate.

Fixed-term mortgage rates are longer-term rates, e.g. 5 or 10 years.
These are linked more to bond markets, rather than the short-term ECB rate.
 
Protocol said:
Fixed-term mortgage rates are longer-term rates, e.g. 5 or 10 years.
These are linked more to bond markets, rather than the short-term ECB rate.
Click to expand...

They are mostly linked to EUR Swap Rates. If you google this, you can see how much they have moved in recent months. I fear a large fixed-rate price shock is overdue now.
 
unknowninsider said:
They are mostly linked to EUR Swap Rates. If you google this, you can see how much they have moved in recent months. I fear a large fixed-rate price shock is overdue now.
Click to expand...
I'd take the 2.85 asap ie this week if possible we are at 2.05 on swaps for 10 years. 2% that you were on is abnormally low by historic or common sense standards as that includes servicing loans, risk , underwriting cost and profit as well as hedge costs. 2.85 for 10 is a very very solid rate.Boi is 3.3 for 10( but with cashback) AIB havens parent is at 3.2 for 10.
 
thanks for the advise sir. i might just do that today. have the forms here to send off now.
 
Paul F said:
Was the 3.5% rate with Haven or with another lender?

Consider posting your mortgage details in the switcher thread (in the format shown in the first post).
Click to expand...
Paul, 3.5% was with Haven, back in summer 2018 - fixed for 5 years. my broker said it was this high because it was a self build. plus i was limited to haven, becuase this was a cross border application, sterling accounts, and the hight of brexit fears etc.
 
I think a large variable rate shock will follow in a year or two. ECB has always been behind curve but match US after 1-2 years. Mortgage rates in US are 5-7% depending on length of fix and credit score. The wholesale interest rate should never have been below inflation or target inflation . With a retail interest rate if 2% if inflation is 2% then that means the use of the property is essentially free of charge (obviously cash flow negative though) which is crazy.
 
2% is very good, but as you said it just for the next 3 years and 7 months.

The fixed rates at that point would likely be about 2%-2.75% above whatever the ECB rate is (going by current rates)

So you are effectively looking into a crystal ball and asking what the ECB will be in 4 years time - no-one knows but likely 1.5-2% as per Lagarde's comments.

The extra €70/month is an extra €3,200 over the remaining term of the current 4 year fixed rate.

At the end of the 4 year fixed the balance will be just over 150k

Let's say the available rate at that point is 4% (based on Lagarde's aim of "neutral interest rates at a 2% inflation rate - eg 1.5-2% interest rates.) Your repayments would move to €920. On a reducing balance that would be approx. €7k extra for the 6.3 additional years the 10 year fixed gives you.

So using those reasonable assumptions you are better off over the 10 year period by about €3,700 and at that point your mortgage balance will be about €110k and interest rate will be less of an issue as the balance has reduced substantially.

In addition to probably being better off financially, peace of mind can be worth the small risk too.

So, if I were in your position, I'd take up the 10 year rate.
 
 
Peemac, thank you so so much for taking the time to respond, doing those maths and bringing a whole picture perspective to this.
i am sure many people are in a similar boat to myself, your contribution to this site, obviously will help a lot of people.
my heads up the left with all this stuff. thanks for the help.
 
Peemac, thanks for doing the legwork on quantifying the cost at 2%+margin ,the trouble is the ECB may have to increase rates alot more than neutral if inflation spirals to get the cat into the bag. Who knows what the neutral rate really is I know the ECB certainly don't know. They are basically incompetent in what they let happen. I think what they meant is they would like inflation to be 2% and interest rates to be 2%. The trouble is the market doesn't care what they like.
 
Peemac. just to let you know, since you have been very kind with your help (and Paul as well), i updated another thread to say i have to stay with Haven now, so il be taking the 10 year fixed with Haven.
From the information i got from Paul regarding switching, i contacted Finance Ireland today. they told me i wont be able to switch to anyone because i and wife have sterling accounts.
Switching is effectively applying for a new mortgage again, with the submission of accounts, employer certs etc.
it was hell getting a mortgage in the south (even though we are residents) becuase we worked in the north. there is definately a border there. Brexit has just made things alot worse.
thanks again for your help.
 
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