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Wow, sub 6% for 3 looks pretty good to me considering the risks to global liquidity.
The real question is if you fix for 3 years at sub 6% what are the rates going to be like when you come off your fixed rate in 3 yers time.
The real question is if you fix for 3 years at sub 6% what are the rates going to be like when you come off your fixed rate in 3 yers time.. Given the amount of quantitative easing that has happened there may be decent inflation at this time and interest rates could be significantly higher.
That's why I bit the bullet and fixed for 5 years with CBA at 6.74% (6.89%-.15% wealth package). 5 year rates don't seem to be falling that fast.
No. Remember what happened last time when world banks stopped lending to each other and credit dried up? The RBA can drop as many times as they like but if the banks are paying more for their $ they cannot pass on the cuts & maintain their arbitrage. I think that the last figure i read was 40% of Au bank money is still sourced offshore. Cost of funds could increase to our banks despite their AAA rating.Wouldn't that cause a drop in interest rates rather than a rise?
Also interesting to note that the lowest 3 year rate from the 4 major banks is 6.19% with ANZ and WBC.
Just thinking, last time round we got as low as 4.99% for 3 years, and now we are currently at 5.99% for 3 years...
Maybe the sweet spot this time is somewhere in between??
I think I'd be happy with 5.5-5.75% as it would make my IPs close to CF neutral.
If 3 year rates drop to this level I might start fixing some of my loans.
Then wait a bit longer for any further drops to fix the rest.
The risk, when trying to pick the bottom, as I learnt last time, is that when fixed rates start to move the other way, the first move up might be a big one.
Eg. It might settle at 5.5%, but then the next move up might be straight to 6.25%, and your main lender might be the first bank to start the upwards moves.
So, that said, we should try not to be too greedy, and when an acceptable 5.x% rate looks us in the face... take it!
I take it you didn't fix last then JIT if you're free and ready to pounce now should they hit your desired sweet spot
That 4.99% didn't last too long from memory ( a week or two).