When to fix our mortgage?

Its the impossible questions, but when to fix our mortgage? We're on AIBs standard variable rate, but I've noticed that AIB have a 2 yr fixed rate at 3%. That's .25% lower than their variable. So, when is it time to fix? If the ECB drop another quarter percent, that'll only match the fixed... will ecb go lower? I know no one has the answer, but is there a conventional wisdom? Does anyone have an opinion?

Re: When to fix?

Do you have to fix? or are you just trying to 'beat the bank'?

If your repayments are tight and you want the security of a fixed rate, then 3% for 2 years is very good, but i cant see the ECB increasing rates in the next 2 years (declining inflation over whole euro zone), more than likely there will be a another few rate drops, so standard variable will be less than 3 soon.

If your trying to beat the bank, then dont bother, they dont offer rates they think they will lose money on (but they are guessing too) especially over 2 years. EBS are offering a 10 year fixed of 4.6% and if that dropped over the next 6 months, it could be a better bet.

Re: When to fix?

Thanks for the info... its a case of payments being a little tight and hoping to beat the bank! I'll keep an eye on the EBS, see where that goes, could be interesting.

AIB doing a fixed rate of 4.45% for 10yr, again if that dropped closer to 4% it could be a very good deal.
If payments are tight now then maybe a good 2/3/5yr would suit better. Only problem is that you will be paying more for the next while, and only MAYBE saving you in the future.
Its a tough decision to make.

if you look at EURIBOR futures and bond markets, all the pros have priced in an eventual ECB drop to 1% - looking at the general awfulness of European economic numbers, this appears very likely

personally speaking I would sit on variable until then and then consider fixing. Rates aren't going to jump upwards in a hurry anyway!

Senna said:

AIB doing a fixed rate of 4.45% for 10yr, again if that dropped closer to 4% it could be a very good deal.

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That's not bad for such a long term actually.

But as above there is at least 1% left to come for the ECB.

Possibility of another 1% drop? Gosh... well, that suggests a sit tight for the moment. Thanks for all the very useful info, I feel a little better informed now, and more confident to make a decision when the time comes.