BankWest - 5.49% fixed for 2 years
- Thread starter StuartW
- Start date
I was under impression the rates will fall well below 5% within a year or two.
I see CBA have cut their one year rates
"Commonwealth Bank reduces interest rate for 1 Year Fixed home loans to 5.99%*
The Commonwealth Bank today announced that it was reducing its interest rate on 1 Year Fixed and 1 Year Guaranteed Rate home loans by 0.45% p.a.
This is good news for Commonwealth Bank home loan customers and is the Bank’s eighth rate cut to its fixed rate home loans since 1 August 2008.
Group Executive Retail Banking Services, Ross McEwan said, "We value our customers and are reducing rates as much as possible today given our current very high wholesale and offshore funding costs.”
Ross said the Bank fully understands the pressures that interest rates have had on customers.
“As Australia’s largest lender, we are committed to remaining extremely competitive in the mortgage market and will continue to find the right balance with our interest rates for customers and shareholders.”
Today’s move means that the Bank’s 1 Year Fixed Rate as part of a Wealth Package will decrease from 6.44% to 5.99% and its 1 Year Guaranteed Rate will decrease from 6.59% to 6.14%.
The new rates will be effective from Monday 24 November 2008 for new and existing customers.
Customers are encouraged to review their financial position and budgeting in light of the changes in interest rates to ensure that their arrangements remain appropriate for their circumstances.
Customers who are seeking some financial advice should contact their branch or our home loan hotline on 13 22 24.
*Applicable to new 1 Year Fixed Rate Home Loans and Investment Home Loans as part of a Wealth Package."
"Commonwealth Bank reduces interest rate for 1 Year Fixed home loans to 5.99%*
The Commonwealth Bank today announced that it was reducing its interest rate on 1 Year Fixed and 1 Year Guaranteed Rate home loans by 0.45% p.a.
This is good news for Commonwealth Bank home loan customers and is the Bank’s eighth rate cut to its fixed rate home loans since 1 August 2008.
Group Executive Retail Banking Services, Ross McEwan said, "We value our customers and are reducing rates as much as possible today given our current very high wholesale and offshore funding costs.”
Ross said the Bank fully understands the pressures that interest rates have had on customers.
“As Australia’s largest lender, we are committed to remaining extremely competitive in the mortgage market and will continue to find the right balance with our interest rates for customers and shareholders.”
Today’s move means that the Bank’s 1 Year Fixed Rate as part of a Wealth Package will decrease from 6.44% to 5.99% and its 1 Year Guaranteed Rate will decrease from 6.59% to 6.14%.
The new rates will be effective from Monday 24 November 2008 for new and existing customers.
Customers are encouraged to review their financial position and budgeting in light of the changes in interest rates to ensure that their arrangements remain appropriate for their circumstances.
Customers who are seeking some financial advice should contact their branch or our home loan hotline on 13 22 24.
*Applicable to new 1 Year Fixed Rate Home Loans and Investment Home Loans as part of a Wealth Package."
Who knows how far rates will fall. I think people are getting a bit carried away with predictions.
It's funny, when rates are on the way up, people panic and lock in their rate at 9%. When they are faced with historically low rates, they want to wait an pick the bottom.
The average pro pack variable rate since 1990 is 6.70%. Therefore, by comparison, 5.49% looks pretty good to me. You could be worse off but probably not by a great margin.
It's funny, when rates are on the way up, people panic and lock in their rate at 9%. When they are faced with historically low rates, they want to wait an pick the bottom.
The average pro pack variable rate since 1990 is 6.70%. Therefore, by comparison, 5.49% looks pretty good to me. You could be worse off but probably not by a great margin.
Spot on Stuart. I'm just waiting for the 7-10 year fixed rates to be around 6%. They're currently closer to 8%. In the meantime I'll stay variable and ride the easing cycle down, but its the long term fixed rates I'm watching closely, not the two and three year rates. Why would you lock for two years when that's during the easing and expansionary setting cycle? Far better to stay variable whilst its expansionary and aim to lock long term to ride the next tightening cycle out.
All just MHO.
Cheers,
Michael
I'd treat fixing loans the same way as buying shares.... don't try to catch a falling knife.
I won't be fixing until they either start to go up or they look v. likely to. There are leading indicators.
I wouldn't expect especially good rates (< 6.5%) for terms of 7+ yrs.
I've just come off 5.94% 5 yr fixed rates. I didn't fix on the way down, but after they started to edge back up. So I certainly won't be fixing this early in the down cycle.
Hi Keith,
Good points made !!!
It worked for me last time - but I haven't been around THAT long... (~9 years). I'd also read that 75% of the time Variable wins - 25% of the time Fixed wins. So I am very reticent of fixing - unless I'm SURE !!!!! You?
Regards,
Good points made !!!
One thing I've noted is that "a good time to fix is when variable FINALLY drops below FIXED". What are your thoughts on that as a "leading indicator"?
It worked for me last time - but I haven't been around THAT long... (~9 years). I'd also read that 75% of the time Variable wins - 25% of the time Fixed wins. So I am very reticent of fixing - unless I'm SURE !!!!! You?
Regards,
Thats where I fixed last time, 3 yr fixed rate was just below basic variable at 6.65%.
A year earlier I could have fixed for 5 yrs at 5.3. Both rates are well 'in the money' now, but when the 5 yr fixed was on offer it wasnt that popular because everyone thought rates were going to fall further..... It was withdrawn before the reserve bank started moving up again, and also before any press comentary about variable rates going up again....Its a tricky business out guessing the money markets.
A year earlier I could have fixed for 5 yrs at 5.3. Both rates are well 'in the money' now, but when the 5 yr fixed was on offer it wasnt that popular because everyone thought rates were going to fall further..... It was withdrawn before the reserve bank started moving up again, and also before any press comentary about variable rates going up again....Its a tricky business out guessing the money markets.
Is it as simple as watching 5 year fixed rates and jumping on the first uptick? Problem is that the first uptick could be 100 basis points...
Last time (2003) the first few upticks were 0.1% or so, although they were v. close together - sometimes consecutive weeks.... make it a habit to check fixed rates every Monday morning.
Also watch 3 yr bond rates. They are a little more volatile than bank fixed rates, so maybe start watching them now to get a feel for the volatility.
And the Cash Rates Futures gives a daily idea of where the smart guys think rates will be up to 18 months hence.
From a macro POV the RBAs speechs & statements will give some indication of where it thinks the economy will be in the coming months, if they say anything positive then cash rate rises are likely, which will feed into longer term rates.
Employment figues rising (or bottoming), consumer spending rising above trend, CPI starting to rise, job advertisments figures rising, car sales rising all point to a strengthening economy... and likely IR rises.
In the last cycle var IRs rose slowly, in early 90's they rose v. quickly....
Some are forecasting this cycle to be more like 90's, with deep cuts to stimulate the economy, and the overcorrection the be followed by a rapid rise in IRs... so a relatively small fixing window is possible.
The stock market is a good predictor of the future economy, if it rises significantly then IR rises are likely.
The banks buy chunks of $$$ at a fixed rate, add a margin and lend those $$$ to us at a higher fixed rate. Those chucks of $$$ last for (say) a month, when the bank buys another chuck of slightly more expensive $$$, they increases their fixed rate. So there is usually a window between the markets saying that rates will increase and the banks running out of the slightly cheaper $$$.
But the best way is to develop a really good relationship with your bank contact, and get a little notice of fixed rate increases & pay a lock-in fee the day before it happens.
So I'd tend to agree that the best indicator is a strengthening economy coupled with the first uptick in 3-5 yr fixed rates will be a strong sign to fix long & low.
Attachments
Keith,
Great post!
Or, maybe I could just watch Somersoft daily and look out for the new thread by KeithJ titled "Now is the time to lock your 5 year rates!"...
You obviously have a good handle on this stuff and demonstrated performance through the last cycle.
Cheers,
Michael
