3 & 5 year fixed rates thread

[Aaron_C]

Mortgages are 30 year loans, good luck trying to hedge a 30 year foreign exposure....it doesn't exist. The most the market will bear is 5 years, and even then you're getting to costs of about 7% upfront. That eats away the 2% margin doesn't it?

Don't get too excited....Citigroup/GE are American banks that have been here for a long time and their borrowing costs are ~0% too. But they are pretty lousy lenders in Australia.

 

[Qlds007]

The Bank of China has also been here for some years and they are not exactly competitive when it comes to their interest rate policy.

Back in the 80's when i was living and mortgage broking in the UK Bear Stearns came out with a 30 Year fixed rate at 4.25%.

No other lender have ever offered more than 10 years in the Uk so you would have thought they would have been swamped.

Look what happen to them.

Overseas lenders will come and go but they all have to raise funds.
As Aaron said hedging a 25 year loan is not possible so they will all have the same funding issues.

 

[DanielG]

Ideally Im wanting the RBA to drop the cash rate 25bps each time when they sit in the February & March next sittings and watch the lender/banks reaction in relation to their 3 year fixed rates. If I can secure a sub 5.5 then I will lock in.

thats what im hoping for but i was waiting for this last time only to see rates jump quickly. Scared I might miss the boat again...

 

[Rixter]

The way I look at fixing rates is if rates go up after I fix then I am ahead from a cash flow perspective. If rates go down then thats the premium I pay for SANF over the fixed rates period.

Investing in what ever asset class you choose IMHO one should always work towards maximising cash flows and minimising risks....fixing rates is just one tool for the latter at your disposal.

I hope this helps.

 

[lizzie]

thats what im hoping for but i was waiting for this last time only to see rates jump quickly. Scared I might miss the boat again...

Wow - how did you miss it?

I missed the two weeks of 4.99% because we were in the process of settling - but immediately leapt on the 5.19%.

Can't be slow or indecisive when these low rates are on offer.

 

[SENIOR]

I locked in all my Fixed loans 3 years ago at 4.99%.That generated heaps of cashflow as rents went up during the 3 year period
I have just locked all my loans again with Westpac at 6.09% Well I decided that isnt to bad a deal.
I remember the posts 3 years ago when some were saying 4.99% was too high and they would wait untill it was much lower.Well it didnt happen and the best way I make a decision is do the numbers and dont try to be too greedy.
Remember variable rates and fixed rates are calculated differently by the Banks

 

[Rixter]

I locked in all my Fixed loans 3 years ago at 4.99%.That generated heaps of cashflow as rents went up during the 3 year period
I have just locked all my loans again with Westpac at 6.09% Well I decided that isnt to bad a deal.
I remember the posts 3 years ago when some were saying 4.99% was too high and they would wait untill it was much lower.Well it didnt happen and the best way I make a decision is do the numbers and dont try to be too greedy.
Remember variable rates and fixed rates are calculated differently by the Banks

Good call senior....I take it your 6.09 includes a 20bps discount as part of WBC's premier advantage package? I have the same offer sitting in front of me at the moment on half a dozen loans with them.

In reality if you can fix in at below the average long term (10 year) variable rates you will be ahead from a cash flow perspective.

 

[Aaron_C]

Good call senior....in reality if you can fix in at below the average long term (10 year) variable rates you will be ahead from a cash flow perspective.

My rates are a variable rate linked to 3 month commercial bank bills and I pay 5% right now

 

[Rixter]

My rates are a variable rate linked to 3 month commercial bank bills and I pay 5% right now

Who's that with and how does one go about (qualifying criteria) obtaining the same?

 

[Aaron_C]

Who's that with and how does one go about (qualifying criteria) obtaining the same?

Well it was from a few years ago with ANZ. They offered good margins on bank bills (1.5% margin). These days the margins are much higher so you won't get the same benefit. The drawback though is that 3 months' worth of interest is payable in advance as opposed to monthly in arrears.

 

[Rolf Latham]

Remember variable rates and fixed rates are calculated differently by the Banks

yup, very very true.

Whereby it is possible that the RBA will continue to lower the cash rate, and banks may or may not follow suit, the 3 and 5 year fixed rates are more stable, and are priced by the bond market more in anticipation of what "might" happe.

So it is possible that the current 3s at least have a good chunk of the most recent and some future expectation in them

ta
rolf

 

[ozk]

Good call senior....I take it your 6.09 includes a 20bps discount as part of WBC's premier advantage package? I have the same offer sitting in front of me at the moment on half a dozen loans with them.

I can only see a 3 Yr Rate of 6.39% - 0.2% Discount for PAP.

Is the 6.09% only offered to selected WBC customers?

 

[Dan_p]

I locked in all my Fixed loans 3 years ago at 4.99%.That generated heaps of cashflow as rents went up during the 3 year period
I have just locked all my loans again with Westpac at 6.09% Well I decided that isnt to bad a deal.
I remember the posts 3 years ago when some were saying 4.99% was too high and they would wait untill it was much lower.Well it didnt happen and the best way I make a decision is do the numbers and dont try to be too greedy.
Remember variable rates and fixed rates are calculated differently by the Banks

I am getting a bit nervous now. Not sure whether we should lock in or not. It would be nice to lock in around the mid 5's but as you say it might not happen and as they start to go up it goes up pretty quick right.

 

[locko24]

I see the guys at shape home loans are offering 15 years at 5.5%.

15 years is a very long time!

 

[Broke]

Fixed rates

Hiya
I am interested but cannot find it on their website , which bank pray tell...

Thanks

 

[MikeR]

I see the guys at shape home loans are offering 15 years at 5.5%.

15 years is a very long time!

Seems too good to be true......... a key question would be Portability.

 

[neil100]

Good call senior....I take it your 6.09 includes a 20bps discount as part of WBC's premier advantage package? I have the same offer sitting in front of me at the moment on half a dozen loans with them.

In reality if you can fix in at below the average long term (10 year) variable rates you will be ahead from a cash flow perspective.

I have 2 years at 5.85 on offer from WBC (for my PPOR) which suits me as I'm very likely to be moving at the end of the 2 year period (ties in with children moving to high school etc.)

I'm sure tough, that at the same time I was enquiring, WBC offered 3 years at either 6.03 or 6.05 - cant quite read my own writing!

 

[silverx]

I see the guys at shape home loans are offering 15 years at 5.5%.

15 years is a very long time!

yeah cant see this on their website either? care to share?

 

[buzzlightyear]

Hiya
I am interested but cannot find it on their website , which bank pray tell...

Thanks

There is no bank offering 3 years at 5.5%. As mentioned previously Citibank is the best at 5.75% but that is P&I only.

And yes, I spoke to them this morning.

 

[locko24]

yeah cant see this on their website either? care to share?

Bank of China.