5 year fixed rate under 5.00%

Considering that 5yrs is quite a long time, I would think hedging bets on a 2yr, then a 3yr (in 2 yrs time) fixed would yield a similar rate over the same term. Pros/cons?

*I have never fixed a rate ever.


pinkboy
 
Say hypothetically, if someone wants to get out from the fixed rate in 3 years time and at that time, the interest rate has gone up by 2%. Would they still incur a breakout cost?

Interest rates "at the time" is largely irrelevant. Your contract will specify fees involved.
 
I'm adopting a buy and hold strategy. Have 2 x loans ($495k & $450k) fixed for 2/3 years @ 4.84%. My new loan due to settle in 5 weeks time is for $388k and I will be taking on this 5 year fixed rate @ 4.89% (have it approved already). GOt this same rate for a $103k loan. Only have a $39k loan variable. Why so small, getting married in 6 months time so al savings will be going to that and wont save too much into offset...

graet rate from the big four! and I also believe its a strong idnication that rates wont go up for the next 5 years, and this talk of a proeprty bubble bursting, or slowing now... well nto for at least 5 years IMO
 
Not sure its an indication of banks predicting what will happen to the RBA's cash rate. The banks Chief Economists have public interest rate predictions, and from memory, most have assumed this is the bottom of the current rate cutting cycle. Pretty sure Evans (Westpac) is the most dovish, and he forecasts a rate rise late next year.

The fixed rate cuts are likely to be tied to reduced funding costs in international credit markets.
 
This could be the cheap money that is coming from European banks as the ECB has negative interest rates.

There was talk of cheap money coming and that Australian Banks won't need our savings for loans. Could be even lower interest rates coming? Cash in bank will be worth less so better off investing some money in high yield shares for a better return.
 
This could be the cheap money that is coming from European banks as the ECB has negative interest rates.

There was talk of cheap money coming and that Australian Banks won't need our savings for loans. Could be even lower interest rates coming? Cash in bank will be worth less so better off investing some money in high yield shares for a better return.

this is the question. with the foreign lenders coming in and the eventual realisation that aussie IRs cannot defy gravity forever, it would suck to be locked into a 5 year fixed rate
 
this is the question. with the foreign lenders coming in and the eventual realisation that aussie IRs cannot defy gravity forever, it would suck to be locked into a 5 year fixed rate

I am wondering whether to fix a loan. The reasons being that we won't sell that house for another 5 years and that fixing gives some certainty. But if rates fall further, we may regret.

So when these foreign lenders are coming? Reckon I have missed some news.
 
I am wondering whether to fix a loan. The reasons being that we won't sell that house for another 5 years and that fixing gives some certainty. But if rates fall further, we may regret.

So when these foreign lenders are coming? Reckon I have missed some news.

I'm considering fixing one as well, but really how low could they go? 3%? still shouldn't get greedy, should be happy with5 for 5.

note sure when, it was a post somewhere here on SS, which tied in with what I had heard of some foreign lenders that have been working on it for some years now
 
Once fixed 100%, can you revalue and draw increased equity as LOC/variable/fixed later on during the fixed term? Can you get second mortgage with another bank if the current one won't lend you more?
 
Once fixed 100%, can you revalue and draw increased equity as LOC/variable/fixed later on during the fixed term? Can you get second mortgage with another bank if the current one won't lend you more?

Just setup a new loan still secured against same property
 
Just setup a new loan still secured against same property

It can be that simple most of the time

Caveats

1. Make sure that your serviceability can be met with that lender duuring the x time of the fixed rate. This will need a little bit of fluffy logic.

2. Valuations could be problematic with that lender

3. Lender policy change risk


If one is highly dependent on extracting equity, and one is marginal in any of the above areas........... think really hard about fixing long term.

ta
rolf
 
Once fixed 100%, can you revalue and draw increased equity as LOC/variable/fixed later on during the fixed term? Can you get second mortgage with another bank if the current one won't lend you more?

Technically you can get a second mortgage with another lender. Practically if you don't qualify for the increase with the first lender, they may block the second mortgage. You don't want to put yourself in a position to need a second mortgage to access equity.
 
Considering that 5yrs is quite a long time, I would think hedging bets on a 2yr, then a 3yr (in 2 yrs time) fixed would yield a similar rate over the same term. Pros/cons?

*I have never fixed a rate ever.


pinkboy

the risk is in 2 years time the current 3 year fixed rate will be diferent to what it is today.

'Rolling' fixed rates, having 3 or more loans all maturing at diferent times, can be a good hedging strategy. So take one loan at 2yr, the second at 3yrs etc.
 
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