Most Irish mortgage-holders opt for a variable interest rate but there are times when the prospect of a good fixed rate is more than a little tempting. Variable rate customers have had a cushy ride this year, with four cuts in the European Central Bank (ECB) base rate bringing it down to 3.25 per cent. But, on the other side of the coin, the rate cuts mean it is now possible to pick up three-year fixed rates of 4.49 per cent. However, the offers may not be there for long.
Mr Jim Power, director of investment strategy, Friends First Asset Management
"Looking at short-term rates, I think the European Central Bank will do nothing for the remainder of this year. As the bank has now altered its approach to considering interest rates once instead of twice a month, that only leaves the beginning of December and it's highly unlikely that they will move then.
"The introduction of the euro in January will probably be a factor in holding rates as they are. That leaves the possibility of a further 0.25 percentage point cut in February or March. I have pencilled in my trough for ECB interest rates at 3 per cent by the end of the first quarter next year.
"Longer-term interest rates have been discounted already and there is very little downside potential in going for a five-year fixed rate now.
"It's as good a time as any to opt for a five-year fixed and anything under 5.5 per cent is a good rate."
Dr Dan McLaughlin, chief economist. Bank of Ireland Treasury
"Normally I wouldn't be in favour of fixing but there is a small window of opportunity here just before the turn of the cycle. Once everyone starts to realise that rates are going to bottom out, the good two-, three- and five-year deals start to disappear.
"We are very near the end of that cycle. Over the next while, the floating rate will move largely between 5 and 6 per cent, with an average over the cycle of 5.5 per cent. If you can get three- or four-year rates below 5 per cent, that's really worth looking at.
"While the market still expects more cuts, there is an opportunity there for fixing, but once it changes, it changes very rapidly and the opportunity to get in at attractive levels disappears."
Mr Colin Hunt, head of research, Goodbody Stockbrokers
"We've seen a significant descent in short-term interest rates and there is further progress to be made. I expect the ECB rate will fall a bit further, possibly down to 2.5 per cent next year, bringing another benefit for variable customers.
"But the potential is there that the upturn will come a little earlier than expected.
"Those with a risk-averse nature should be looking at fixing this side of Christmas. The risk is that, as the global outlook improves, rates will start to creep up sooner rather than later.
"We are at a low point in short-term interest rates. Once interest rates reach a trough next year, we can expect to see them higher for the next three to four years before falling again. That means there is value to be found in three- to five- year rates. Long-term interest rates reflect medium-term growth prospects."
Ms Fiona Adkins, economist, Hibernian Investment Managers
"From the tone of the last ECB press conference, it was evident that the bank was clearing the decks ahead of the euro and we won't be seeing more cuts for the moment.
"They may be hoping that the euro zone will be dragged out of the slump but we lagged on the downturn and we'll probably lag on the recovery.
"I'm predicting euro-zone inflation of less than 2 per cent next year and low growth, so I don't think the pressure will be there to push up interest rates in 2002.
"I don't think there's that much of a rush to fix at the moment. Of course, there's a risk the market will start to anticipate an increase in rates but I see variable rates staying level for the year.
"Having said that, fixed rates are better value than usual at the moment and there may not be much point in waiting or trying to outsmart the market."
