How long to fix mortgage for?

[IntoTheUnknown]

Current lender: Bank of Ireland
Outstanding mortgage balance: 287k
Approximate value of your property: 900k
The date you started your fixed-rate mortgage: Just finished our fixed rate
How many years you fixed for: 2
Your current mortgage interest rate: 4.15% variable
Your current monthly repayment: 1760 approx.
Your property's BER: B2
Are you due to get extra cashback from your current lender in the future: No

My query is should we re-fix with Bank of Ireland or switch to another lender? BOI have offered fixed rate for 1 or 2 year @ 3.35%, 3 or 5 year @ 3.45% (eco saver rates). I keep hearing rates are coming down but I don't see any evidence of it with BOI. I'd like to fix so I can stop thinking about it for a while but don't want to get tied in for too long if rates are going to come down. I'm not sure what the best thing to do is so I'd appreciate advice. Thank you.

 

[Dr Strangelove]

Fixing a rate is like taking out insurance.

Shorter is usually cheaper but you bear the risk of rates rising but also the potential benefit if they fall.

My mortgage is 20% of household income (was 35% at the start) so it means I'm much more able to tolerate a jump in rates.

 

[Brendan Burgess]

Dr S.'s reasoning is theoretically correct. And it is practically correct as well.

Usually you pay more for a fixed rate product but in the dysfunctional Irish mortgage market, fixed rates with some banks are lower than the variable rates, wherever we are in the interest rate cycle. BoI for example, has always had high variable rates because many people default to them when their fixed rate ends. ptsb is the same. AIB , in contrast, has lower variable rates for its non green mortgages.

I think you should switch to Avant and get a tracker.

Avant Launch Euribor Tracker

https://m.independent.ie/business/personal-finance/tracker-mortgages-return-17-years-after-the-celtic-tiger/a683691515.html The new product will be set with a margin of 0.9pc over the Euribor rate, for those borrowing 80pc or less of the value of the property. A margin of 1.1pc will apply for...

www.askaboutmoney.com

Then you don't need to worry about much. And if you come into cash you can pay it down without penalty.

 

[Itchy]

What's the likelihood of you moving house in the future? You could fix with Avant's One Mortgage for the remaining life of the mortgage. In order to lower your payments, extend the term. You could use the certainty to e.g. maximise your pension, if you have scope, knowing you could plan into the future. If rates come down, you could pay the break fee (Avant cap this at 2% of the remaining balance, I believe).

The more I think about, the more I think its madness to expose borrowers to interest rate risk - particularly, variable rate policies are a gift to the vultures. Longer term fixes are the way to go.