Fixed interest and fixed exchange rate loans

Is it possible to get a loan from a bank overseas to buy a
property (which would be the security) in Australia, while being a resident of Australia?

The purpose would be to find a very low interest loan, eg, 2% pa at a fixed
and interest only basis, from an overseas bank.

I understand there is a currency risk.

Could you not have a "fixed exchange
rate", in the same way as you have a "fixed interest rate", to eliminate
this risk???

Does anyone have any experience or thoughts on this? Is it possible?

I have searched the forum and read previous posts by Patosan and Jeremy Laws, but can't find anything relating to fixed exchange rates or Australian residents getting overseas loans (at a cheap interest rate) for property in Australia.

There is some information on the forum through pertaining to non-residents eg. getting Japanese yen loans.

GSJ

Yes you can fix the exchange rate but the cost of buying this fix will be equal (or higher) than the cost of borrowing in aussie dollars from your local bank.

The FX fowards market (which is how you do this) is a multi trillion dollar market that the banks trade between each other and the calculation to work ou the cost of fixing currency to a foward date is a function of the differece between the home currecy and teh offshore currency.

If there was an arbitrage (ie risk free gain) then the big fx trading banks would be onto it within 30 secs and trade out the difference.


HTH

Nat R

Nat R,

Thanks very much for your reply and clarification.

The "FX forwards market" - wow, I've never even heard of this one before!

I suspected the strategy I proposed may have been too good to be true, and from what you say - it is!

Regards,

GSJ

GSJ

Have a look at St George Banks product list they have a Foreign Currency loan with interest rates charged in the Country you have chosen for the Currency.