Any Recent Fixing Regrets?
- Thread starter CHAOS
- Start date
I have one fixed at 4.89%
No real regret - finishes at the end of the year...it will actually make financial sense for me to break it now and take the fee. I will come out on top with 0.5% reduction between now and December.
I was on top when I first fixed it so it evens out dollar for dollar.
No real regret - finishes at the end of the year...it will actually make financial sense for me to break it now and take the fee. I will come out on top with 0.5% reduction between now and December.
I was on top when I first fixed it so it evens out dollar for dollar.
Fixed rates are determined by the bank bill swap market (+ margin) and have factored in two-three reductions already (and a later rise).
Coming from financial markets background with a major bank I'm familiar how you can interpret the yield curve ...
For example (using made up numbers to illustrate):
180 days 2.1%
1 year 2.5%
This suggests that the rate for the period between six and 12 months that the market is factoring in would be 2.9%.
http://www.afma.com.au/data/BBSW
Using that principle you can use yesterdays BBSW in this link and calculate where market thinks rates are going for various intervals. Then apply a home loan margin to those rates and make your own assumptions.
Coming from financial markets background with a major bank I'm familiar how you can interpret the yield curve ...
For example (using made up numbers to illustrate):
180 days 2.1%
1 year 2.5%
This suggests that the rate for the period between six and 12 months that the market is factoring in would be 2.9%.
http://www.afma.com.au/data/BBSW
Using that principle you can use yesterdays BBSW in this link and calculate where market thinks rates are going for various intervals. Then apply a home loan margin to those rates and make your own assumptions.
Is that 12 months or 5 years ??
JUst before Christmas we refinanced and had to pay some reasonably substantial breaks fees on a couple of loans.
They were at 4.99% and 4.9% and we refinance at 4.70 I think.
Hopefully now things will come down to 4.20%.
At the time we were cursing but it has now worked out OK - providing all the banks pass on the reduction of course.
They were at 4.99% and 4.9% and we refinance at 4.70 I think.
Hopefully now things will come down to 4.20%.
At the time we were cursing but it has now worked out OK - providing all the banks pass on the reduction of course.
5 years. What on earth was I thinking. Oh god...!
indeed.....
Hard to know at the time. For me the biggest problem with fixing long is inability to sell.
The reality is even as early as 6 months ago the general consensus was a rate rise in 2015. I don't think anyone can claim to read the market, we can just do the best that we can with the information available to us at the time.
As I said - it's a small tactical mistake. Small mistakes you need to learn to put behind you, it's the big ones you don't want to get wrong!
Did you have a relatively high LVR?
I had friends who mostly fixed their with relatively long terms as well. Found most of them had high LVRs and got spooked by the news and claims of rate hike to be coming soon.
You can sell. You just have to pay the break costs. I had a small unit in Mandurah that was on a fixed loan. I fixed because I wasn't planning to sell. Some things happened and it turned into a good opportunity to sell an underperforming asset. I ran the numbers and it worked out to be a good move to sell even factoring the break costs. I sold and paid out the loan and put the surplus cash into another project. Worked out well at the time.
The general consensus was a rate rise??? 6 months ago?
No way, what are you reading?
The RBA has consistently indicated, until today's rate drop, that reduction in currency?.ohh sorry?whoops..., interest rates was the main agenda with the thorn in the side of Syd property going ballistic.(off it's low base in the cycle)
No way would I have fixed during any period up until now.
However, now is the time that one should maybe factor in any fixing if, and only if, you have no plans to sell during whatever period you may fix for. (as per Deltaberry's views)
Slow and steady guys. Is the world actually firing on all cylinders right now?
Nah, didnt think so.
I reckon more drops in the int rates to come.
Just MHO.
The general consensus was a rate rise??? 6 months ago?
No way, what are you reading?
I read all the major publications daily. There were many articles pointing to this. And I don't seek out articles by doom and gloomers either. I was clearly not critical enough when consuming this but I did not imagine any of it either.
Yes agree. Lesson learned. All part of the learning experience.
Before I knew much, I fixed for triple that length at nearly 2.5% higher
I broke the loan, copped the fee and massively increased my borrowing capacity as a result.
