Is a ten year fixed rate a good idea?

Recently KBC introduced a 10 year fixed rate, they are not the first back to have done this, in the past other banks had them but their prices were high, the difference today is that you can get a 10 year fixed rate mortgage for below 3% and that means it’s worth considering.

First of all, why would you want to fix for so long? Obviously the longevity of a guaranteed price in a world where rates are expected to rise over time makes it attractive. This has to be balanced against the likelihood of competitive forces driving down Irish mortgage rates. Currently there is upside down pricing where fixed rates are cheaper than variable rates, how long this will last is anybody’s guess.

What we can do is look at the yield curve in order to get an idea of when rates might go up. Looking at that curve today (the quote date is from the 22nd which is last Friday) we see that yields are still negative a full six years into the future.  What …

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