Interest rates going up

[franksm]

What to do, oh wise ones ?

Fix or stay on a variable rate ?

I have considered a fixed rate in the past but... preferred the risk of variable rate, and it's great how that paid off in the past year (albeit being in negative equity).

Is anyone going to move to fixed now ? Or is that like buying a Megane or a Micra or one of the other 'most reliable cars of JD Power Survey'.

[Ivan]

variable rate frank. I think the fixed rates are going to be a bit crap.
On the fixed rate the bank will nearly always win.
I was lucky and got a tracker the last time.

[leamyj]

I reckon I've got about 5 or 6 years left on mine, hopefully the rates wont go crazy like before

When that's cleared, might re-mortgage and buy a mk3, or 4??

Would hate to be at the starting point again though.

John

[Stig]

OI Don't know wha a tracker..........................

[shenab]

Frank

no one can advise you on this as it's down to your particular circumstances and whether you can afford it if the interest rates hike up a whack even for a short while.

The rule of thumb is that the banks never loose out and that variable is always a better option than fixed.

But if you can fix in at say 4% and that is all you can comfortably afford to pay and the var rates peak at 5-6% even for a year, then you are better off fixing as that year could be when you have other bills to pay and you end up in the sticky.

Back in the 80's when interest rates were 15-16% people locked in and when the rates started coming down they were screwed. But rates where still climbing then. Rates are still low, and I don't agree that you wont get a good fixed rate. If ever now is the time you will. Certainly not when the ECB starts raising rates again.

We have no past history to go on here which is why it's hard to judge. We don't have control of our own interest rates for the first time in a recession and there has been a major banking issue such as not been seen since the 1930's.

Personally I can't see interest rates ever going as high as they did in the 80s as we are dealing with the EU economy. That said, we could completely screw up here and be kicked out of the EURO then all bets are off. (This is assuming you are talking about property in the south and not the north!)

Pick what suits you if fixing means you are comfortable with your payments and you have peace of mind pay no attention to the guys saying var is always best.

Just my tuppence worth and having personal experience of var/fixed in the UK during the last house crash! I ended up in a var rate climbing when I could have fixed in and actually saved money over 5 years. It does happen occasionally but not in the long term. There again fixed terms are usually short term.

HTH

Shena

[Stig]

Personally I can't see interest rates ever going as high as they did in the 80s

True, but they would'nt have to rise anywhere near the 80's rates of 14 or 15% to put people out on the street because the amount of money people borrowed in the 80's is no where near comparable to the borrowings of the last decade for a semi D in Dublin/Galway/Lim/Cork/Kildare or Portlaoise for eg.
That will be the issue for folks going ahead

[shenab]

the amount of money people borrowed in the 80's is no where near comparable to the borrowings of the last decade

This is an interesting one Stig, you know when I bought my first house in the mid nineties my folks were just finishing off their mortgage. My mum was horrified at the amount of money I had to borrow so we did an exercise on salary versus mortgage and it turned out my folks have actually borrowed a much higher percentage for their mortgage in the 70s.

I'm wondering with the raise in salaries and standard of living since those days does it balance out? I've heard arguments saying both but I would be curious. My first job out of college paid me IRP7,500, at the peak graduates in my game were being paid around the low €30ks for their first job. In the 80s I couldn't have afforded a house on my own in the 90's I could.

There is of course the hype over property too which really was ridiculous. Since when should a 20 something being able to afford a property on their own!!

My view has always been 20's are for fun. Who wants to tie themselves to a mortage in their 20s!

You can tell, this is a personal peeve of mine!

S

[fabfiveferg]

[
My view has always been 20's are for fun. Who wants to tie themselves to a mortage in their 20s!

You can tell, this is a personal peeve of mine!

S

You're bang on there Shena. that said if I had bought in my 20's I'd probably have it paid off by now. I would have been awful boring in my 20s though.

Has anyone checked out the current fixed rates available? haven't done so in a while. I would agree that geberaly speaking sticking with variable will work out cheapest. If it wasn't then that would make you better at banking than the Bankers (Not so unlikely).

As Stig said they don't need to reach the highs of the 80s. With people having such large mortgages every .25 or .5 % rise is a little kick in the klackers

[Ivan]

i would have loved a Mortgage in my 20's, in fact i went looking for one at 19
8 grand the house was back in 1990 the bank said no cos the house needed work.
Kicked myself when i seen it sold on again around 1997 for 200 grand.

You have to remember with the fixed that if you want to sell on the house
there is penalties, not just the rate going up or down that will affect you.

I think it's very easy to see where rates are going, up towards the end of the year.

[Stig]

[
My view has always been 20's are for fun. Who wants to tie themselves to a mortage in their 20s!

You can tell, this is a personal peeve of mine!

S

You're bang on there Shena. that said if I had bought in my 20's I'd probably have it paid off by now. I would have been awful boring in my 20s though.

Has anyone checked out the current fixed rates available? haven't done so in a while. I would agree that geberaly speaking sticking with variable will work out cheapest. If it wasn't then that would make you better at banking than the Bankers (Not so unlikely).

As Stig said they don't need to reach the highs of the 80s. With people having such large mortgages every .25 or .5 % rise is a little kick in the klackers

Good points Shena ,Ferg & Ivan,
Rates will rise in the last qtr of this year, thats the word. I'd try stay variable if poss personally. I've a tracker gladly.
But I did buy in my 20's, and I still enjoyed myself,travelled,party'ied, etc,in my mid 30's now,on my 3rd house,small enough mortgage, could'nt have done this unless I had gotten on that "hyped up" property ladder early. I remember the first house I bought. Went down the pub that night for a celebratory beer and meet a bloke who asked me what we/I was celebrating? (he's was a real smart arse).
I replied, I bought my first house. He asked "for how much"? When I told him he burst out laughing saying I was mad!(ohhhhh, the irony from a guy living with his mammy and had a crap job and a drink problem ) - I sold that house 2 years later for nearly 73% more than I paid for it , anyways, I'm glad I did but who has a crystal ball? Where will we all be in 20 years time from now?
It was all MAD looking back and will be in the future too. History has a nasty habit of repeating itself.

[shenab]

You have to remember with the fixed that if you want to sell on the house there is penalties, not just the rate going up or down that will affect you.

Yeah, of course, this is always a factor too, still is anyone going to sell at the moment with neg equity in their home? I think Frank mentioned he was in that position.

Banks are not keen to allow you to carry that forward right now. In the UK in the 90s banks were biting your hands off to get people back to buying again and offered trade up mortgages including an previous neg eq in the assumption that the next house you buy would eventually cover the difference when prices started climbing again.

The difference we have now is this isn't just a housing issue, it's a lending issue. I'm hearing story after story of people with good deposits looking to buy reasonably priced houses and being refused mortgages.

The only way to kick start all this is some major pressure from the powers that be to force the banks to start lending again. Even if it's only the banks the state owns! but I guess that's another days discussion.

At the moment everyone's in a holding pattern. The longer this goes on the worse for all.

S

PS Stig, congrats. It was a fun ride I played for nearly 10 years. Bought my first at 29, sold the last one 5 years ago when we got the one we live in now. Great craic but still wouldn't have wanted to do that a couple of years later.

[Ivan]

I replied, I bought my first house. He asked "for how much"? When I told him he burst out laughing saying I was mad!(ohhhhh, the irony from a guy living with his mammy and had a crap job and a drink problem )

Had the same from a friend of mine, Oh how i laughed when he paid
60 grand more 3 years later for the same house in the same area

[shenab]

how i laughed when he paid 60 grand

no everyone can be as astute as you Ivan!

[Ivan]

how i laughed when he paid 60 grand

no everyone can be as astute as you Ivan!

Nothing at all to do with being astute, just i had to live somewhere
and buying was cheaper than renting. Just luck on my part.

[shenab]

Funnily enough I had typed lucky but thought you might come back with "smart" so I guess you are a bit of both - no offense intended!