What will be impact of the current turmoil on interest rates. Should people fix?

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IntoTheUnknown

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"I think you should switch to Avant and get a tracker."

Thanks again for all the help. I'm looking into the Avant option. Can I ask, with the new tariffs and talk of recessions etc., are interest rates likely to start rising? If so, would the Avant tracker route be more risky?
 

Should people fix?​

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If their finances dictate the need for the predictability of fixed repayments and maybe if they aren't likely to need to move house or pay down the mortgage early within the fixed rate period then maybe so.

Otherwise, probably not. Especially not in an attempt to time the market and save versus a competitive variable/tracker rate.
 
Imo and if macroeconomics has thought me anything:

Tariffs = increased costs = inflation = increased IRs to temper rising inflation => fix
 
Yes, but tariffs may also depress trade and output, which is deflationary.

Not easy to know which force will be stronger.
 
Lots of moving parts and you really haven't given us much to go on. But some broad points:

Trackers -the name says it all - they track something and do that really well. Whereas other mortgage products are less directly impacted by market rates. They are influenced by market rates but just look back at the last 3 years. Irish banks mortgage rates were slower to adjust then other banking sectors and all these mortgage rates were slower to adjust than market rates.

The fact markets rates adjust faster than traditional mortgage rate products can be good or bad. It's bad on the way up but good in the way down.

Big picture on market rates are we are on the way down following a period of exceptional high interest rates. All the commentary I've read on the current trade turmoil is that this might slow those rate cuts rather than reverse them.

So if the general direction is down for rates than a tracker type product might have merit. But let's be clear this is all speculation and educated guessing by market commentators. Market commentary usually talk about months or maybe a year or 2. A mortgage is usually measured in decades.

But all of the above leaves out the most important aspect of any decision. Your personal finances. The lower your capacity to withstand an interest rate increase the less suitable a tracker type mortgage product is for your.

Avant very kindly link to the market rate they track . If such a product was available over the last couple of years and given the current margins you could have been paying a rate of over 5% not that long ago.

FM.M.U2.EUR.RT.MM.EURIBOR1YD_.HSTA | ECB Data Portal

data.ecb.europa.eu data.ecb.europa.eu
 
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Personally I take a fix for budget certainty. In hindsight I could stitch together where interest rates are/were and when would have been absolutely ideal to fix, for what duration, or to stay out to avail of a better rate, and optimise my mortgage lifetime interest bills. Just like I could look at when I should have ideally bought and sold Nvidia or Apple stock. But I'm also trying to budget for a household and generally avoid risk on my dwelling.

I wouldn't fix for a long time at a very high rate. I'd bet that it might come down over 1-2 years and taking a shorter fix. But neither would I stay out on a variable for a long time to wait for a few more ECB cuts to come through - recall the start of last year when the markets priced in a lot more interest rate cuts at the start of the year than actually happened.

Looking at the market right now (and obviously the products available will depend on your circumstances) you can get 3% on a 3-4 year fix with AIB (green mortgage) and PTSB (doesn't seem to be "green" required). ECB is at 2.5%. Could be headed for 2% over the next few quarters before the tariff stuff kicked off. At retail that probably means 2.5% mortgages might be on the cards by some stage in Q4. But then the tariff stuff could drive things in another direction.

Say you had a €300k mortgage with a term of 30 years, and went on to a fix now at 3% vs gambling for a 2.5% fix in 9 months time. Your monthly minimum repayments would be €79 more expensive per month at 3% vs 2.5%, about €3,792 over a 4 year fix.

What would it cost to sit on a variable rate for 9 months to see if the rate came down? Depending on LTV, you'll get about 3.75% to 3.95% on the market. Vs a 3% fix now, you'd pay between €127-€158 per month more, or €1,143-€1,422 over 9 months, to stay out variable and see if you can get a 2.5% fix. That's about 30-37% of your potential saving over a 4 year fix at 2.5% vs 3% gambled on the idea that rates will fall, within the timeframe you've set out. Makes waiting look that bit less attractive.

Again, this is a scenario with limited knowledge of your situation.

Personally I'd consider 3% a pretty fair and ok rate, affordable, not a million miles off where the bottom of retail interest rates have been available for anyone not on a legacy tracker, and I'd fix there happily today, in full knowledge that I could be leaving money on the table.
 
That 3% for me number is the target. I took a long 10 year fix at that. If I got that offer again or lower I'd take it.
 
Yes 3% would be good. I'm tempted to fix with my current lender for a year at 3.35% and watch what happens in the meantime. Then maybe do a longer fix or switch at that stage (given there is work and potential costs involved in switching).
 
www.independent.ie

Decision on ECB rate cut this month ‘now hangs in the balance’

Tariffs being imposed by US president Donald Trump may stymie plans for a European Central Bank rate cut later this month.
www.independent.ie www.independent.ie

Independent economist Austin Hughes, listening to her interview with Kenny, said Ms Lagarde did not seem worried about inflation.

He said a decision by the Governing Council on whether to cut rates again later this month was in the balance.

Reports from Frankfurt suggest the doves on the Governing Council remain committed to further rate cutting
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Mr Hughes said there was a case for cutting rates this month and then reviewing the impact of tariffs on the eurozone economy before reducing rates again.

“I believe there is a case for going now, but there is also a case for holding off to better understand the impacts of the tariffs. But I still believe rates will come down again between April and June,” he said.
 
On the back of this m.independent.ie/business/money/trump-tariff-boost-for-homeowners-ecb-tipped-to-slash-interest-rates-to-15pc-as-fallout-rocks-economy/a1330064072.html I'm leaning towards short term variable before fixing at the end of the year assuming rates are updated. If I could get below 3% for 10+ years fixed I'd jump all over it.
 
Extremely hard to judge direction of rates, they’ll need to be cut close to 0 at this rate to try and control recession, but inflation could be v high due to tariffs so directly opposing forces. All in all though, economic collapse will ‘trump’ inflation. we took one year at 3.85 last year to get us to this September in expectation of getting under 3.0 by then. Currently we could get, ptsb 4 year at 3.0, AIB green 2 year fixed at 3.25 or 5 year at 3.3, so it seems likely we are well on track, before recent events, they could go much lower. A small potential bright spark amid 20% plus loss in pension value in a few weeks.
 
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