Why are 20% of new mortgage holders paying high variable rates when they could fix at a much lower rate?

Merowig said:
If I fix all of the variable or a part of the variable - do I have again fees with the solicitor on that?
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No, there are no fees for fixing.

I didn't have a fixed rate, but I used to overpay frequently on a variable mortgage, and everytime I did they had to send me a letter. I've a stack of them in my file!

As things currently stand, AIB cannot charge you a break fee on your 3 year fixed rate. To do so, they would first have to reduce the 2 year rate below the rate you're paying. Covered here

Calling AIB customers who fixed before the latest fixed rate cuts in September 2020

Any customer currently on their 3 or 5 year fixed rates can break for free, and refix now at the lower rates. This is because of an extra calculation that AIB do looking at their own interest rates, so because they provide 2 & 4 years rates higher than the existing 3 & 5 year rates, they cannot...
www.askaboutmoney.com
 
RedOnion said:
As things currently stand, AIB cannot charge you a break fee on your 3 year fixed rate. To do so, they would first have to reduce the 2 year rate below the rate you're paying. Covered here
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Just have a question - is there something stopping AIB from reducing the 2 year rate to below their 3 year fixed rate? Why is there an assumption they would not do it?
 
RedOnion said:
Where exactly did I make that assumption?
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Sorry, maybe I used an incorrect wording.
It's just by reading various posts on this subject I got an impression that there is something preventing AIB from reducing their 2 year fixed rate to below their 3 year rate?
So just asked if I understood if correctly and if I did then what is it?
 
No, there is nothing to prevent AIB reducing their 2 year rate.

If they don't drop it below the current 3 year rate, then they cannot charge a break fee for those on the 3 year rate.

I didn't intend to imply that they cannot do so, so feel free to correct any wording where it reads as an assumption. Or ask any question where I can make the scenario clearer to understand.
 
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