Is 4.7% 3yrs too high to fix??

This is my first post on this website so I'm hoping I'm in the right forum etc! I realise the issue of whether to fix or not has come up a few times but with situations changing all the time I wonder could anyone put forward some advice on this.

Basically, bought house three years ago this month on 35 year mortgage. Got a fixed rate of 5.14% for 3 years which is now up. Just rang EBS and have been offered two options:

- 3 year fixed at 4.7%, we are told (by the bank) that this would work out at repayment of €1876 after TRS

OR

- variable rate of 3.23% which would work out at €1550 per month after TRS

My partner is in and out of work in landscaping industry so things are very tight. My inclination is to fix but I wonder will we end up paying over the odds again! I have read in previous threads/newspaper articles that fixing above 4.5% is not a wise choice. Why is this the case?? Though I am aware that nobody is in posession of a magic crystal ball any advice at all would be appreciated!

sunflowers said:

Just rang EBS and have been offered two options:

- 3 year fixed at 4.7%, we are told (by the bank) that this would work out at repayment of €1876 after TRS

OR

- variable rate of 3.23% which would work out at €1550 per month after TRS

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Have you checked your original loan offer or contract to ensure that what the bank told you today matches what's in the original offer? If not, I would advise you to do so just to double check that everything is in order.

Thanks alot for your reply Paulk!

Very unsure about what to do and am feeling reluctant to go to a financial adivsor and fork out more money before I make the choice!

Took your advice and just got the 'Issue of loan cheque' document out there to have a look. It says:

Rate of Interest 5.14% Base Rate Yrs 1-3
After 3 years the Interest Rate will be: Variable Base Rate (currently 05.00%) (APR 5.2%)

In other documentation it also says: 'After 3 years: Variable Base'

What does variable 'base' rate mean? Thanks for your help- I really appreciate it!

Also, the mortgage we took out was for €460,750 (92% of purchase price) and we have 32 years left on it so am pretty sure this will stop us moving to any other lender!

This is just my view and I'm not a financial advisor but I'd go for the lower 3.23% variable rate.

Lower repayments now should be advantageous given your partner's current difficulties.

And what people often forget is that to "profit" from fixing in circumstances such as yours, the average variable rate over that 3 years needs to be greater than 4.7%. In other words, you're almost trying to outwit the bank. I know plenty of people who've fixed their mortgage but I only know one person who "profited" from doing so. And given the inflexibility of such mortgages (i.e. what happens if you want/need to sell?), it probably wasn't worth fixing at all.

If you're happy to meet the fixed repayments, why not save the c. €320 difference every month?

Thanks Pat - appreciate the reply!

I've been mulling over it all day and have a feeling that's what we'll go for!

The fixed rate at 5.14% for the last 3 years didn't work for us either! Luckily I'm a national teacher so am guaranteed (some kind) of income in the future while we wait for the ecomony to pick up. I guess saving the difference now and sitting tight makes sense!