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There's ridiculous variance in these forecasts. There's more to be gained from understanding the cause of that variance.

Have updated my rate fix analysis xls......designed to play 'what if' on the next 10 years' fixed and variable rate movements.

Good find Red....I am unfamiliar with The NEw Matilda......but Scott Mitchell is dead right about the IMF predictions, the vacuous posturings of Rudd, and how economically illiterate and left leaning media let him get away with it.

HG, what will be interesting is Rudd and Swan rhetoric (and actions) as NAB and ANZ become increasingly less competitive, and CBA and WBC pick up more market share, and a duopoly threatens....

Anything is possible HG....if our recession gets a lot worse and umemployment causes ever rising bad debts, the banks would have to cover it somehow. But I am not a finance analyst and have no idea what the probabilities are of one thing or another happening. I tend to think the banks would...

All banks will not be immune to the same pressure ANZ is under.... This pressure is a disincentive for banks to drop fixed or variable, no matter what the RBA does... ANZ shares tumble as H1 profit misses market forecasts

thx. Jo the spreadsheet that did this scenario is at the link I posted earlier in the thread. if you aren't famliar with excel scenarios, you can just mess with the whatif worksheet and put your own idea of future interest rates in to see how it will effect you.

The other consideration Jo is time tends to even things out. If the average interest rate over the last 30 years is 7.5%, and you can fix now for a long period (not 5 but 10 years) at less than 7.5%, then you increase the probability of being better off for having fixed now. But only if the...

This might help a bit Jo. Your average variable interest rate for the 2 loans is 5.26%. I take it if you fix either or both loans today you get a rate of 5.94%. The analysis above compares fixing both loans at 5.94% today against keeping both loans variable for 5 years. The av variable rate...

Very interesting vb....I wonder about net foreign liabilities leading to our loss of AAA though, and effecting fixed... Still can't see variable going up significantly in the next 3 years. Chilli, can you expand on what risk the banks carry with a fixed loan on the books?. The deal is locked...

this gives a bit of a breakdown of bank funding......but no specifics like country of origin, swf's, pension funds, etc.

let me know when you find out the sources. I've been trying to find an answer for 5 years. The APRA website has some interesting stuff. meanwhile, imho, foreign sources of fixed loan funding are sensitive to aussie govt bond yields, as foreigners presumably want to get paid back in their own...

I don't always agree with Pascoe, but do on this. hard to see the economy overheating (with or without inflation) until credit fueled consumption gets back to early 08 levels.....which I don't see for a looonnggg time.... so my money is on the deflationary to middle of the road...

a comparison of three scenarios. a big decision on whether to fix or not as it could entail a 100k difference in interest on total loans of 1m.

Thx Shane. I just put a third worksheet in which allows you to do a whatif on the variable rate over the 5 years....in other words, change the variable each year by whatever you want. There's always the chance variable rates will drop below what they are now, and stay low (japan)....or...

Here's a simple calculator that finds a 5 year variable rate breakeven point when compared to fixed. It compares the cost in flat dollar terms and in discounted cash flow terms using NPV. The latter calculation requires the use of excel solver function.

yes, Bill Evans must have a broad definition of "arguably". :)

yes, one doesn't want to get too stuck on the above data. take the cash rate yield curve forecast for instance. 6 weeks separates the graphs. 15% separates their forecast. very rubbery figures..... rising net foreign debt by public and private avenues, bond issuance by fed and state govt...