Tracker V's Fixed

[casperjack]

Hi

In the process of buying our first house. Mortgage broker is advising that we go with a tracker rate. We were thinking of fixed rate, as there is a lot of talk about interest rates going up. Has anyone any advice on what to do. House price is €170K.

 

[elcato]

Hi casperjack - No simple answers here but for what its worth you should try and see if you can afford any fluctuation in the mortgage repayments over the next few years as oppose to the fixed figures. You should also weigh up whether you will have peace of mind on a fixed. Its a bit like shares I'm afraid in trying to guess the markets.

 

[WizardDr]

Elcato is right.

Talk is rates will rise in fourth quarter. If they do, there are often several of them in quick succession. (See US and UK rates as examples.) The hard question is whether the state of the German and French economies is bad enough to keep rates at the levels they are at.

You could:
- go all variable via tracker;
- go all fixed for 1,2,3,4,5 or 10. There is a cost difference and you could compare that to the variable;
- you could go 50/50
- or you could purchase a CAP;
- you could go variable and lodge the difference between that and a fixed in a 'reserve' account to draw on later if and when rates rise.

If rates do change all the fixed rates will be even dearer.

 

[casperjack]

Hi,

Thank you both for your reply. Think we'll think a little longer about it as we have a few weeks before we sign.
Casperjack

 

[Sherman]

Also the banks being total 'bankers' they've already worked the prospect of future interest rate rises into the fixed rates they offer, therefore you're unlikely to make any real saving unless rates shoot up by more than the banks expect in the next 5/10 years.