Fixed rate mortgages March 2010

Financial institutions have recently indicated they will shortly increase variable mortgage rates. If this is true, should you fix the rate of interest on your mortgage?
Simple answer is yes.
But before you do, go and talk to your provider, make sure you understand the benifits and the down side before you take the plunge.
It is expected variable mortagge rates will rise to over 4% within 12 months, and some providers are offering fixed rates for 5 years at less than 3.5%, so while there will be a time when the rate you pay will be higher for a short time, in the long run the variable rate will be higher, by how much we cannot predict, but at least you will have the peace of mind knowing, you repayment will not change until the end of the fixed rate term.
If you have a query, send me an e-mail,

Gerry

Refinancing......what to do!

2010 will begin with many borrowers worried about rate increases and decreasing pay due to higher taxes and simple reductions in basic pay.
You will think about how to reduce the cost of loan repayments, and you will be encouraged to lump all your loans into one loan, probably over a longer term, so as to reduce the monthly repayments............ to save you money.............Yeh!

well more times than not............................NO,

you won't save money, you will just pay less for longer but the longer you pay, the more you pay in the long run, I know this sounds like a contradiction, but it is true.

If you want to know how to wise up and not be fooled by quick talking financial sales people, e-mail
info@mobilemortgages.ie or phone 086 8 33 33 33 we will help you to make the right decision!

Gerry Owens QFA

Fixed mortgage rates, to fix or not to fix, that is the question?

It is clear from reading reports over the past few months and weeks that Irish lenders are giving their clients better value than their counterparts in the UK.
Just look at the facts, the base rate in the UK is only 0.5% and the average mortgage rate is over 4% APR, in Ireland the ECB rate is 1% and the average variable rate is about 2.7% APR. Considering, lenders are paying high rates for deposits, for example some institutions are paying 3.5% on deposit, there is an imbalance that will be corrected sooner than later.
But what does this mean, for rates going forward?
It is obvious Irish lenders are going to have to increase their variable mortgage interest rates, one lender bucked the trend earlier this summer,and increased thier lending rate, but the other are only waiting until the time is right, post NAMA to increase their Variable rates, and will most likely also reduce the rate paid for deposits.
By how much will rates rise? that is the $64 question? but it is fair to say, it will be an increase of at least 0.5 to 0.75% and that is separate to what ever the ECB does next year, and we all know the ECB will increase rates sooner or later, but most likely later, so watch this space.
Now for fixed rates, currently fixed rates are about 4% for three years and 5%+ for 5 years or so.
So to answer the question, what do I do about fixed rates?, if you are looking to save money, then fixing may not give the result you want, because interest rates, may only rise to about the fixed rate and then crest and fall back again, with no saving.
If you want the security of a fixed repayment for a period of time, then take the best rate you can get on a day, with your lender of choice and then forget about rates for the term chosen.
If you have a question, feel free!
Gerry

Welcome

This is a blog created by Gerry Owens of FirstMortgage.ie to compile a basket of knowledge on the subject of property markets and mortgage lending.