3 & 5 Year Fixed Rate Trends

[StuartW]

This may be a silly question, but one I'd like to know the answer to if possible.

One our offset/loan accounts for an IP's has a loan of $140,000, ... we have $75,000 parked in the offset which obviously greatly reduces the monthly repayments. The loan balance continues to reduce each month as rents are deposited.

My question is: if we paid the extra into the offset to make the balance $zero, ... what happens? Obviously we'd still have the debt, but would anything come out of the account each month for the bank?

We are not planning to have the whole $140,000 parked in this offset, but I would like to know what happens if we did.

Mystery

If its a true offset on interest only repayments then, if the loan's fully offset, no repayments will be required.

However, if it on P&I repayments or a silly offset (like St George's home loan offset for example) then repayment will still be deducted.

 

[tdh78au]

Dragon at 6.99 for 3 years

hhhmm ... tempting. Currently on 6.51 variable with ANZ .... so only additional 0.48% to manage risk for next 3 years.

Probably a dumb q ... but will they offer this rate for re-finance?

 

[Rolf Latham]

yup

assuming u service and the val comes up ok and they like the security

can lok the rate away too so that if the refi takes a while u are guaranteed the 6,.99

ta
rolf

 

[Ms Jade]

Dragon at 6.99 for 3 years

Holy crap! just checked the website & it's not there. Is this because they haven't got around to it yet? Is it pushing my luck to think i can get the 0.15 off the fixed rate seeing i'm on the Advantage Package? I'm paying them 6.68 at the moment & happy to fix this rate for 3 yrs SANF.

 

[skater]

Dragon at 6.99 for 3 years

Rolf, is this available for me?

 

[Rolf Latham]

woops

not avail for anyone : (

6.99 for 2 not 3 ...............getting old sorry

I will be back shortly, I know wesuck have a 7.19 for 3

ta
rolf

 

[Rolf Latham]

Rolf, is this available for me?

not even for Andrew


I made a boo boo

ta
rolf

 

[skater]

not even for Andrew


I made a boo boo

ta
rolf

Naughty boy.

 

[mystery]

If its a true offset on interest only repayments then, if the loan's fully offset, no repayments will be required.

However, if it on P&I repayments or a silly offset (like St George's home loan offset for example) then repayment will still be deducted.

Thanks Stuart, ..... I thought that's how it would work, but I just thought I'd ask. BTW, .. it is a true offset account.

Thanks

 

[bradje]

I'm just trying to understand why others might lock in a higher than variable rate at the moment.

If StG have come down to 6.99 for 2yrs, then are we not seeing a trend down, rather than the reverse? So why would I lock in a rate which is above my current variable with the trend going down?

Seems there's still a lot of bad news to come out of Europe and if Greece is an indicator, then Wall St will use further bad news to drop like a rock and we will follow. (So I can't see why Govr Stevens said bad news from Europe shouldn't worry us).
That will then, it seems to me, put further pressure on the rates to drop, which is what we are seeing in the Fixed term market.

Pls let me know if the above is a lot of ....nicely of-course....
thx
JB

 

[Rolf Latham]

Hiya Bradje

While the immdeiate trend for mid term rates looks shaprly down, this may change if and when inflation takes off.

Your logic isnt flawed where we are, but there are times where a borrower will prefer to lock in at that rate today, even if it means they will be paying much over the average.

Mostly these reasons relate to personal risk management and comfort.

ta
rolf

 

[tobe]

The same could have been said at the bottom of the fixed rate curve, right at the hieght of the GFC a year or 2 ago. 3 year fixed 4.99%, variable rate 4.25/5% or so, with every indication they may fall further. they didnt, that was the best it would get, but at the time you would have been fixing at a higher than variable rate, and it wasnt supposed that variable rates were heading up.

 

[bradje]

Thx for the input...Yes I appreciate the points made. But I don't think i will try and pick the bottom....When the interest rates start to go up, then after considering, that would seem a better time to fix, unless as Rolf says, there are other over-riding reasons like comfort levels.

Cheers,
JB

 

[JIT]

The same could have been said at the bottom of the fixed rate curve, right at the hieght of the GFC a year or 2 ago. 3 year fixed 4.99%, variable rate 4.25/5% or so, with every indication they may fall further. they didnt, that was the best it would get, but at the time you would have been fixing at a higher than variable rate, and it wasnt supposed that variable rates were heading up.

But the trend in fixed rates changed from falling to rising well before variable rates started to rise, and this was the trigger to consider fixing.

It was pretty clear when this was at the time (not just in hindsight), but only because people shared information about which banks were increasing/decreasing fixed rates at the time.

 

[bradje]

But the trend in fixed rates changed from falling to rising well before variable rates started to rise, and this was the trigger to consider fixing.

It was pretty clear when this was at the time (not just in hindsight), but only because people shared information about which banks were increasing/decreasing fixed rates at the time.

Hi mate,
Can u pls explain this a bit more in terms of the current situation with fixed and variable rates? Sorry, I'm not quite understanding what you have said.
Thx
JB

 

[tess85]

Word on the street is that the WBC fixed rate of 7.19% won't last that much longer; so, can I remind WBC customers of this handy tip that Bluegoose gave in this thread: http://www.somersoft.com/forums/showthread.php?t=53212

"If you are a premier advantage customer you can call them and ask to lock in the rate as at today. They will send you a letter in the next week or so asking you to confirm/sign off on the locked rate within 14 days of the original letter.

No lock fee, no switching fee, no obligation!!."

I just did this........ not certain of whether I will take up the offer in the end, but at least I have 14 days to think about it and watch what happens. To fix rates at WBC, call 132558 option 4 and option 3.

 

[tess85]

Hi mate,
Can u pls explain this a bit more in terms of the current situation with fixed and variable rates? Sorry, I'm not quite understanding what you have said.
Thx
JB

JIT's referring to a situation that occurred in early April 2009 when WBC were offering fixed rates of 5.19% for 3 years, and people on SS were posting about it and deciding whether to take it up or not. Hindsight is a wonderful thing...... but at the time IR rates were still meant to be falling so some people were holding out for lower fixed rates. In the end, fixed rates started going up BEFORE the variable rates did.

 

[JIT]

RAMS "slashes" fixed rates!

http://money.ninemsn.com.au/article.aspx?id=1070579

RAMS 2 year fixed rate 6.98% pa
RAMS 3 year fixed rate 7.23% pa

 

[JIT]

Hi mate,
Can u pls explain this a bit more in terms of the current situation with fixed and variable rates? Sorry, I'm not quite understanding what you have said.
Thx
JB

Explained in these threads:

http://www.somersoft.com/forums/showthread.php?t=47795
http://www.somersoft.com/forums/showthread.php?t=51571

Cheers.

 

[bradje]

Thankyou
JB