Prediction for mortgage interest rates for the coming few years?

P

Paulk

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Hi Everybody,

I currently have a fixed interest only mortage which will cease in 18 months.

With the recent drop in interest rates, my mortgage repayments haven't changed as I'm on a fixed option.

To cancel my current agreemnt with the bank will cost approximately €5,000. However, my mortgage repayments would work out at approximately €200 less per month. Thus if I cancel my current agreement, I'll be losing out on approximately €1,200.

I'm just wondering what the general consesus is:

Are mortgage interest rates likely to continue to decrease?

Is it worth my while cancelling the fixed agreement, or would I better off to continue the fixed payments for the next 18 months?

Thanks for your help.

Paul
 
What rate would you be going on to with your current lender if you quit the fixed rate?
It may be possible to get a lower rate elsewhere and save more per month?
 
Did you try and negotiate the penalty with the bank? Probably a difficult thing to do in this market, but worth a shot. I had mine reduced several years ago (went fixed the first time, will never again).
 
Related question - I know long-term forecasts can't be totally accurate and that variable rates would be smarter in the short-term. However, what if I were considering 3.25% fixed for the life of a mortgage? Rates won't reamain this low for 30 years! They're bound to go back up eventually. Other options would put a rate above the 3.25 in year 2 onward based on current quotes. I know I have to look at penalties for leaving a fixed...but are there any thoughts about this option and about rates in say 3 years and more from now?
 
(Bump - sorry - couldn't delete duplicate)

Related question - I know long-term forecasts can't be totally accurate and that variable rates would be smarter in the short-term. However, what if I were considering 3.25% fixed for the life of a mortgage? Rates won't reamain this low for 30 years! They're bound to go back up eventually. Other options would put a rate above the 3.25 in year 2 onward based on current quotes. I know I have to look at penalties for leaving a fixed...but are there any thoughts about this option and about rates in say 3 years and more from now?
 
Spanish Arch said:
Related question - I know long-term forecasts can't be totally accurate and that variable rates would be smarter in the short-term. However, what if I were considering 3.25% fixed for the life of a mortgage? Rates won't reamain this low for 30 years! They're bound to go back up eventually. Other options would put a rate above the 3.25 in year 2 onward based on current quotes. I know I have to look at penalties for leaving a fixed...but are there any thoughts about this option and about rates in say 3 years and more from now?
Click to expand...

Where are you based? Are Irish banks quoting fixed rates of 3.25% for the life of a mortgage?
 
It is something that was unofficially suggested as a possible option by my mortgage adviser for a major Irish bank. I have a loan offer and am exploring finer detail options. If this is possible - very tempting isn't it?
 
I'd bite the other hand off.

"unofficially suggested as a possible option" - was drink involved - be honest.:)
 
I'm thinking of doing so if it's not an empty tease! I am totally inexperienced with such things, but have researched antiquated advice about pros/cons fixed/variable. Just wondering if there were any prophets out there that might make a contemporary (2009) case against such a thing? How long rates might stay low over years and years? etc.

edit: No drink involved - normal "possible" options exploration between banker and me.
 
Spanish Arch said:
It is something that was unofficially suggested as a possible option by my mortgage adviser for a major Irish bank. I have a loan offer and am exploring finer detail options. If this is possible - very tempting isn't it?
Click to expand...

It sounds like they don't know what they are talking about, or, you have picked them up incorrectly.
 
I would take 3.25% for the term of the mortgage without second thought, but i suspect you might have picked it up wrong, unless your taking out a 5/10 year mortgage.

If the term is much longer, especially if its 30/40 years then you wont be able to pay off your mortgage early (without penalty), still a good deal, but something to consider.
 
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