March 2nd 2006-0.25% increase as expected

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mikeyny

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the base intrest rate has been increased as was expected
 
Re: .25% increase as expected

Right, so down to business. Is the obvious thing to change to a fixed mortgage? Are there any circumstances - given the forecasts that we're in for more increases - in which it would make sense to stick with a tracker mortgage? Took out first mortgage last autumn. Going to check with my broker tomorrow whether it's possible for me to switch to a fixed. Not planning on moving any time soon...
 
Re: .25% increase as expected

freelancer said:
Right, so down to business. Is the obvious thing to change to a fixed mortgage?
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That is far from obvious in my opinion. As ever only fix if you need to and not in an attempt to time the markets, second guess the financial institutions and save money.
Are there any circumstances - given the forecasts that we're in for more increases
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Forecasts are simply attempts to predict the future. Nothing more.
- in which it would make sense to stick with a tracker mortgage?
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Yes - if you would not be hard pressed to meet mortgage repayments given, say, a couple of percent increase in rates then stick with a competitive tracker.
 
Re: .25% increase as expected

Do you not think that the banks will have all future rises built in to the fixed rate by this stage. It is not as if they do not know that it is coming. What rate have you been given.
 
Re: .25% increase as expected

This was discussed previously here, last October and here, a month later. Actually, and despite my own advice at the time — I subsequently did switch from my NIB tracker @ ECB +0.79% to the three-year fixed rate @3.45% that they were then offering. Had I stayed with the tracker, my rate would have gone to 3.04% at the first ECB increase, and would now be going to 3.29%. If the rate increases by another 0.25% or 0.5%, then I'll start slowly 'winning' back, as long as the higher rate holds for the next two or three years. At which point I have the option to revert to whatever is then their best tracker (or of course move elsewhere).

My mortgage, thank goodness, is pretty modest at this stage, so the stakes are pretty low — over the three years, the difference probably won't amount to more than a few euro — but it's as close to gambling as my austere principles allow me to get...
 
Re: .25% increase as expected

DrMoriarty said:
My mortgage, thank goodness, is pretty modest at this stage, so the stakes are pretty low
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The gamble on saving money with a fixed rate is most often likely to end is losses. I don't really understand why anybody who is already in a "comfortable" position with regard to their mortgage would bother fixing.
 
Re: .25% increase as expected

Like I said, it's a small gamble on saving a few quid, in my case. My switch has only cost me a few bob so far, and I'm now repaying at 3.45% instead of 3.29%, or — soon enough, probably — 3.54% or even 3.79%...

From today's Indo (free registration required):
If this happens, I'll have the frisson of knowing that 'YES, I'm saving €18.50 a month!' (or whatever). Why, over a year, that's nearly the price of a meal out for two!

I'd have thought a lot more carefully about it if I had a bigger-than-five-figure mortgage, 'though.
 
Maybe I should start a new topic for this, but, just on the topic of this increase, I was wondering how often and by how much the ECB can change the base rate.

Is it once every quarter/month?

Is 0.25% the highest they can increase it by per quarter/month?

I think the American equivalent of the ECB can change the interest rate every month??

Thanks
 
There are no hard and fast rules. They adjust interest rates up or down as dictated by economic conditions/factors across the eurozone.
 
hattrick_12a said:
Is 0.25% the highest they can increase it by per quarter/month?
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No, they can probably adjust by whatever amount they want.

There was consideration given to a 0.5% increase before yesterday's decision.
 
ECB meets every month, 1/4% is the norm but it isn't a hard and fast rule.
 
I heard a comment from an economist guy at NCB yesterday who said they expect the ECB to increase rates by 0.25% every 3 months until the end of 2006. So the next one should be in June.
 
Note that rates can decrease as well as increase. We had several years of rate cuts (at least in part in an attempt to stimulate economic growth in the major economies of the EU) up to recently. As growth picks up rates tend to increase. Of course regional economies such as our own don't necessarily fit into this picture neatly (e.g. the Irish economy has been booming for years and rates have been falling up to recently because they are set at the ECB level rather than at the local Central Bank level these days!).
 
bear in mind people that if we were not in euro zone our base interest rate would be at least 5% ,we are in an artificially low interest rate environment which inflates asset prices but the reverse is also true if europe boomed and we were in a bad state we could be stuck in a high rate environment despite unemployment/inflation recession etc.this is one of the bigget causes of the house price boom of recent years.

also dont beleive hype that interest rates are at historical lows, when rates were high for long periods they were usually accompanied by even higher inflation which made the amount of your mortgage decrease in real terms very quickly, eg if interest rates were 15% and inflation was 17% this makes a real interest rate of minus 2% and a 100k mortgage would be only 83k in real terms after one year.inflation in ireland is now 3% and mortgage rates are 3.5approx so real rate is only half a per cent.
 
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