Whats the general consensus from the pro's looking at fixed rates right now?
Is it seriously worth considering fixing for 5 years for around the 5.99% mark?
Is it seriously worth considering fixing for 5 years for around the 5.99% mark?
5 yr fixed under 6%...
- Thread starter Michael.Knight
- Start date
how long is a piece of rope : )
there isnt a simple answer to that broad q
ta
rolf
Well one could argue that at 5.99%, historically much lower than the average 5 yr fixed rate over the last 50 years....
But on the other hand some people believe that variable is the way to go, because you'll never beat the banks at their own game...
So just wondering what each person's perspectives are in regards to their own circumstances...
But on the other hand some people believe that variable is the way to go, because you'll never beat the banks at their own game...
So just wondering what each person's perspectives are in regards to their own circumstances...
It's fine if you are never ever going to sell the property within 5 years nor do you expect to get any sort of equity release in the future. I think that is a big call as you don't even know what's going to happen tomorrow. It might be OK for some people like First home buyers on a 95% + LMI lend who have bad savings and want certainty to pay down their mortgage, for example.
You could also argue that historically interest rates have been well over 7%, thus any fixed rate below 7% is a good deal. The flaw in this logic is will the next few years be an environment where rates are likely to increase or will they stay low - frankly I don't have a clue.
There's a good chance that rates will drop further and possibly fixed with also drop, so we may not have seen the bottom yet. It's also highly likely that rates will increase within the forseeable future, so most fixed rates would be financially worth fixing now overall; just don't complain if they drop lower first. Of course we may be at the bottom right now so by waiting you may miss out on the lowest rates. The third option is they could just keep dropping down to 2% and fixing now would be expensive.
In other words, as Rolf said, "How long is a piece of string?" Better to make your decision based on what you're willing and able to pay and also be willing to wear the potenital negative consiquences of your decision.
Either way you can't beat the banks. Lenders buy fixed rate money at a certain price, then factor in their margin. They also borrow the money on fixed rates, so effectively by allowing you fix with any particular product, the lenders have locked their profit for a specified period of time. They don't care if rates rise or fall from that point as they've guaranteed their margin.
Borrowers should take the same attitude to fixed rates, not being too concerned if they rise or fall, as it guarantees their repayment amount.
I have been looking at fixing some loans for 3 yrs at 5.59% as many have done so in recent times. With all the paperwork in front of me, I have decided against this because access to funds/equity and the ability to move around is far more important for me as an investor rather than saving 0.3 of a percent p/a - particularly in a buyers market that we are in for the majority of Australia
I also have a gut feeling variable rates have further to go before the end of the year and banks will come out with juicier fixed rate deals
I also have a gut feeling variable rates have further to go before the end of the year and banks will come out with juicier fixed rate deals
saiman, you can have a fixed rate and still be able to access equity. The main restriction with fixed rates is you can't move lenders (easily). It's no problem to access equity via a split variable loan.
BTW, we've found an even better deal for 3 years. 5.39%.
BTW, we've found an even better deal for 3 years. 5.39%.
fundamentally, just because short term variables may decrease a little due to the RBA lowering the cash rate, the
ME are now doing "silly" numbers at 5.39 for 3, BUT one must stress this is likely a small pool of cash sourced from one of their "scaredey" Super Fund manager members.
Or..............its the start of a new round of "new normal" where Super fund managers are staring at a lowering of 30 and 90 day bond rates as the economy continues to slow, and the RBA attempts to stoke the fire a little
ta
rolf
Do they pay comms ?? Me bank.
Isn't this the industry fund bank??
I believe so
No longer a CU though. Now a bank
No more lolly doddle lets see if we can maybe make a buck
I expect they have more commercial reality now, and have realised that to secure income for their members they need to have access to a bigger market base.
Dont forget, of the SFs cant invest their $ for a reasonable rtn, its a hard road.
Brokers for them are a a FIXED Cost distribution model, so they have just gone with common sense.
Those ME Commodores with humans in them are very much a variable cost
ta
rolf
