CBA "Honeymoon" rate

[Lukey13]

Hi everyone

I have a quick question...

My friend is desperately trying to jump in before June 30th for the FHOG and is considering CBA's 12 month "honeymoon" rate.

I have suggested to her the possibility of locking in a great 3-5 year fixed rate later this year when rates possibly bottom out. If my friend locks in a 12 month "honeymoon" rate, is it possible to opt for a fixed within that 12 month period, or is it essentially a 12 month fixed rate in itself?

Thanks in advance,
Luke

 

[Propertunity]

Sorry this does not answer your specific Q Lukey13, but I am still of the view that a 3 year fixed rate will end in tears.

If we are lucky the GFC will be mostly over in 2 - 3 years. So the dust settles and everyone puts their heads up, including the RBA, and says OMG look at all this inflation and IRs start to rise quickly back to trend.

IMHO, I think 5 year min and 10 - 12 year fixed would be much safer.

 

[Lukey13]

I too agree that a 5 year fixed rate sounds like better timing, however one must consider the circumstances of the buyer. For instance, a locked rate of 12 years might mean that a buyer is unable to sell out during this time without facing a monstrous fee . Also, for some (not all) fixed rate products there is no offset and/or limited ability to make extra repayments.

 

[buzzlightyear]

I too agree that a 5 year fixed rate sounds like better timing, however one must consider the circumstances of the buyer. For instance, a locked rate of 12 years might mean that a buyer is unable to sell out during this time without facing a monstrous fee . Also, for some (not all) fixed rate products there is no offset and/or limited ability to make extra repayments.

Aside from the premium you would be paying up until the time that variables are less than your fixed, which might be 12+ months or longer in anycase.

 

[Lukey13]

Aside from the premium you would be paying up until the time that variables are less than your fixed, which might be 12+ months or longer in anycase.

Good point. There is a reasonable difference between the fixed and variable rates at this minute. This may or may not be an argument for a longer fixed period, depending on how you look at it.

In regards to my original question, does anybody know whether CBA's "honeymoon" rate is essentially a 12 month fixed rate or whether it's a temporarily discounted rate during which another fixed rate can be locked in?

 

[Spectre]

You've answered your own question in a way

They have 2 as you've outlined above

 

[Spectre]

also lukey - dont know but if shes no savings then cba's out as their max lend is 90+LMI
and they want gen savings for a portion as well