Key Post In the light of the recent rate cuts, should I fix my mortgage rate?

The reality for most people is that the costs involved mean switching is not a possibility. I could not even afford the valuation fee let alone solicitor's costs. Even if I could, the interest I would be switching to would need to be considerably lower to actually make a saving when these expenses are taken into account. I also don't think I'd be approved for a mortgage if I were to switch. I can only go with the best option on my current mortgage with my current lender and that seems to be fixing.
 
It costs about €1,000 to switch. So it's not worth it at present, as the difference between the various lenders is so small.

I expect there to be a significant increase in competition. This should bring down Standard Variable Rates and Low LTVs in particular. The fact that the AIB fixed rate is lower than the SVR suggests that they expect their SVR to fall further.

Many people will be unable to switch because their LTV is >80% or because they have a bad credit record, or because their earnings would no longer justify the new mortgage. But I still expect this cohort to benefit from lower SVR rates all round.
 
Mortgage: AIB
Current rate: 4.05%
LTV: Variable > 50%< =80%


I am really tempted by the new 2yr fixed rate and would love your input.

Currently on 4.05% new rate (reduced from 4.29%) and the current offer for a 2yr fixed is 3.80%

I was actually tempted by their 5yr fixed (3.90%) but reading this forum , and others, it seems that a long-term fixed rate may not be a good idea.

It seems the magic number seems to be around 3% and if I could get closer to that then it makes sense to fix.


 
We are switching to KBC at the moment, have LTV <60%. Would it be better to take they fixed rate @3.3% for a year, rather than their 3.65% variable rate?
Hoping to save €125 a month from existing AIB mortgage on this 3.3% rate! :)
Just afraid rates will drop lower than 3.3% in the next yr or so if the pressure keeps up on the banks!
 
Ask yourself "Why is the fixed rate lower than the variable rate?"

KBC has been aggressively chasing business. They may well respond to the AIB cut.

Brendan
 
Brendan Burgess said:
I said that they would not switch you in another thread, but another poster corrected me, saying that they had submitted a revised valuation and had their LTV category changed.
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Good luck to the poster who had their LTC category changed but I made a similar enquiry to AIB recently and was told I could not change from one LTV rate to another. I found the restriction in Part 4 clause 3.6.3 of their General Terms and Conditions. As property values recover and mortgages are paid down there are likely to be many on SVR in the same boat.
 
Looking for some advice, please

Hi Brendan and everyone in this thread,

I have found your posts here while looking for some clarification on the AIB rates as we have to decide which one to go for.

My husband and I are really novices when it comes to this, so everything we've managed to learn is from the internet and we really need some advice.

We calculated our LTV as the price we agreed with the vendor divided by the amount we're borrowing from AIB and multiplied by 100. It's 84%!!
We thought that giving a higher deposit and getting a lower mortgage would be more advantageous overall.

The options we have now are:
- variable rate > 80%
- fixed rate
- split rate

I thought that the split rate (60% fixed and 40% variable > 80%) would be a good choice as the variable percentage would entitle us to the benefits of the variable rates (e.g. to pay a lump sum in the future). Is this too simplistic (I feel it is)?

Could I ask for your advice as you seem to have a lot of experience?

Thanks a mil and really sorry for the long message.
 
test123 said:
We are switching to KBC at the moment, have LTV <60%. Would it be better to take they fixed rate @3.3% for a year, rather than their 3.65% variable rate?
Hoping to save €125 a month from existing AIB mortgage on this 3.3% rate! :)
Just afraid rates will drop lower than 3.3% in the next yr or so if the pressure keeps up on the banks!
Click to expand...

I've been pondering this very question. But although the one year fixed rate is very attractive - after the year you roll over on to the SVR which is higher than the >60% LTV rate. So I think you'll save for a year but pay more subsequently & possibly for many years. I'm going to go with the >60% LTV for that reason.
 
Many thanks for your reply and advice re my AIB mortgage fixed versus variable rate. Hoping to draw down our small mortgage in coming week and although best advice seems to indicate stick with variable (4.05%) in the expectation that this rate will drop further in the year ahead, AIB is now quoting 3.5% for 1 year fixed. My question now is would a drop of .55% or greater in the variable rate over the next year or so be a realistic expectation ?, otherwise maybe the 1 year fixed would be a good idea ?
Also, at the end of 1 year fixed, I presume I would default to variable thereafter or opt to fix again, picking which ever rate is most beneficial ?
Many thanks !
 
NightOwl668 said:
Many thanks for your reply and advice re my AIB mortgage fixed versus variable rate. Hoping to draw down our small mortgage in coming week and although best advice seems to indicate stick with variable (4.05%) in the expectation that this rate will drop further in the year ahead, AIB is now quoting 3.5% for 1 year fixed. My question now is would a drop of .55% or greater in the variable rate over the next year or so be a realistic expectation ?, otherwise maybe the 1 year fixed would be a good idea ?
Also, at the end of 1 year fixed, I presume I would default to variable thereafter or opt to fix again, picking which ever rate is most beneficial ?
Many thanks !
Click to expand...

I went fixed for my first year just to have a little peace of mind and they was a good intro rate of 4.09%
One thing that banks don't seem to remind people is that you'll need to get your house re-valued after the year to switch (the original is invalid after 6 months)

I got a quote of 200 euro for it but just went back to my original valuer - told him the story, he came out to view the house for 15 mins and charged me 50.
So, don't think you'd lose a whole lot going fixed for a year
 
BOI customer, quite interested in their new 3.8% 2 year fixed rate. I'm currently on 4.1% so its not a huge saving, a little under 1K over the 2 years, but hey, every little helps.

I'm generally quite skeptical of fixed rates - the bank usually wins, but BOI seem quite stubborn about not lowering their SVR, and I'm already paying less than the SVR anyway.

Only drawback I can see is that after 2 years I'd go back up to 4.3%, but I'd expect this rate to have dropped by 2017 and/or there to be more competition in the market for switchers...

Anyone any thoughts?
 
Banks' do not carry the risk of fixed rates themselves. They buy the agreement on the market and in the majority of cases the margin return is similar for both fixed and variable. Th reason that there is a charge for exiting fixed rate agreements earky is that the Banks will be subject to the full cost of the FR agreement whether or not the rate is used for the full term of the agreement.
 
shweeney said:
BOI customer, quite interested in their new 3.8% 2 year fixed rate. I'm currently on 4.1% so its not a huge saving, a little under 1K over the 2 years, but hey, every little helps.

I'm generally quite skeptical of fixed rates - the bank usually wins, but BOI seem quite stubborn about not lowering their SVR, and I'm already paying less than the SVR anyway.

Only drawback I can see is that after 2 years I'd go back up to 4.3%, but I'd expect this rate to have dropped by 2017 and/or there to be more competition in the market for switchers...

Anyone any thoughts?
Click to expand...
I just rang Boi there to query my options.
Unfortunately for me I forgot my mortgage was with ICS and was sold to DILOSK in September along with 2000 others. Only option maybe to try to switch but the cost and complicated application (also have negative equity buy to let) are not appealing.
 
pguyo said:
I just rang Boi there to query my options.
Unfortunately for me I forgot my mortgage was with ICS and was sold to DILOSK in September along with 2000 others.
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I was with ICS also and afaik my mortgage was transferred to BOI. Was it just a subset of them that was sold to DILOSK?
 
thesteve said:
I was with ICS also and afaik my mortgage was transferred to BOI. Was it just a subset of them that was sold to DILOSK?
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From what i gather approx 2000 mortgages to the value of 250 million were sold to Dilosk. All loans transferred to Dilosk were performing loans also. We feel trapped with DILOSK to be honest. They dont have fixed rates. They have spoken about entering the mortgage market during the year. Will be interesting to see their offers for new customers. No doubt existing ones will probably be forgotten about.
 
I'm in a similar situation to shweeney. Current BOI customer with SVR of 4.35% (<80%LTV), just received annual statement with flyer stating the new fixed rates available to existing customers from 2nd Feb. (They make it very difficult to find their rates on their new website - I'm still looking...)
I think for me its even more worth going for the 3.8% fixed for 2 years rate (<75%LTV) - a decrease of 0.55%
I just hope they don't require a valuation going from 80%LTV to 75%LTV...
 
fme said:
I'm in a similar situation to shweeney. Current BOI customer with SVR of 4.35% (<80%LTV), just received annual statement with flyer stating the new fixed rates available to existing customers from 2nd Feb. (They make it very difficult to find their rates on their new website - I'm still looking...)
I think for me its even more worth going for the 3.8% fixed for 2 years rate (<75%LTV) - a decrease of 0.55%
I just hope they don't require a valuation going from 80%LTV to 75%LTV...
Click to expand...

I spoke to them and they need a valuation for any changes in LTV. She said it would be €100-130 for a valuation from their approved valuers. The reduced rate is only worth about €30 per month for me so I'm not sure if its worth it (given that I'd be tied into the new rate for 2 years and the mortgage market is in a bit of flux at the moment).

Also I note BOI now have an SVR for <60% mortgages of 3.9%, might be better to try and get this as it would leave some flexibility if better offers become available in the future.
 
44brendan said:
Banks' do not carry the risk of fixed rates themselves. They buy the agreement on the market and in the majority of cases the margin return is similar for both fixed and variable. .
Click to expand...

Hi brendan

This is only true up to a point.

The banks are making huge margins on both variable rate and fixed rate business at present. If the competition takes off, then the variable margins will return to a normal rate, but those who have fixed will be stuck paying the outrageous rates.

And this is one of the main reason banks like fixing - the borrowers can't move, so it kills off competition.

Brendan
 
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