What is happening with fixed rates?

We have been asked a few times about fixed mortgage rates and why they are lower than standard variable rates at the moment.

This has been going on for a few months in the mortgage market and the reason is fairly simple, lending rates are going to drop over time.

The one year fixed rate has traditionally been one that is used to attract business to a bank or building society. They are often a loss leading rate and after availing of it the person goes onto a higher rate or another fixed rate so we have to strip them out.

But from the 2yr rate onwards you normally paid a premium over and above the standard variable rate. So what is happening?

Lower fixed rates mean that banks are going to capture a margin that is likely to decline in the near future. The Euro yield curve is below.

What you see is that it is negative (below zero) for many years into the future, in fact, it’s only hitting …

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‘Are we there yet?’…. when will the bottom of the housing market be reached?

The most popular question I am asked as of late is whether or not we are at the bottom of the housing market, and the answer is ‘no…. but perhaps closer than we think’. Today we will consider a few of the things we will need to see in order for ‘recovery’ to occur.

First of all we need to see a reduction in the massive overhang of housing stock, even if the number reduces, they all need to be sold and a degree of scarcity will need to develop in order to make prices go up again, currently supply is swamping demand and that dynamic will leave uncertainty in its wake.

However (and here is part of the ‘perhaps closer’ bit), NAMA will likely take a lot of housing off the market, in particular it will take it off the market and drip feed it back in, if this happens then it will avoid devastating fire sales, it might also lead to stagnation …

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To fix or not to fix, even if it ain't broken

Paul O’Connor from MyHat.ie asked me to do a post about fixed rates, like us, they get lots of questions on mortgages, property etc.

Fixed rates at the moment (there are new ones due for publishing soon on the back of the most recent rate cut) are (listing only the non-LTV restricted ones) as follows:

2yr fixed: 2.8% 3yr fixed: 3.1% 5yr fixed: 3.6% 10yr fixed: 4.25%

For those on variable rates the general rate suite is around the 3.1% mark, with several lenders telling us outright that they won’t be passing on rate cuts then moving to a fixed rate over up to the 5 year mark is of little consequence, in fact, it would likely be a smart thing to do because rate changes on the down are not going to be passed on (see the article on rate compression we did here before), but on …

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To fix or not to fix, even if it ain’t broken

Paul O’Connor from MyHat.ie asked me to do a post about fixed rates, like us, they get lots of questions on mortgages, property etc.

Fixed rates at the moment (there are new ones due for publishing soon on the back of the most recent rate cut) are (listing only the non-LTV restricted ones) as follows:

2yr fixed: 2.8% 3yr fixed: 3.1% 5yr fixed: 3.6% 10yr fixed: 4.25%

For those on variable rates the general rate suite is around the 3.1% mark, with several lenders telling us outright that they won’t be passing on rate cuts then moving to a fixed rate over up to the 5 year mark is of little consequence, in fact, it would likely be a smart thing to do because rate changes on the down are not going to be passed on (see the article on rate compression we did here before), but on …

Read More →