CBA Standard Variable @ 6.61 or Fixed at 6.64 for 12 Months!

Hi All,

I believe we are no doubt going to be experiencing alot more interest rate rises yet before things settle, so the throught of fixing has been on my mind, expecially since the fixed interest rate is so close to our variable rate.

CBA has on offer:

Current standard variable 6.61% (inclusing if of the 37 basic point increase)

or

I can fix for 12 months @ 6.64%

It will cost me $300 per loan to fix so i will be basically up for $600 upfront.

What are all your thoughts on this, does this sound like a good opportunity to fix for 12 months, we are most definetly going to have a few more increases yet, so surely this is something to consider?

I am definetly no expert on fixing and to be honest i have never fixed before so all your views are very welcome.
 
Hi there tbinvestor.

I am suprised your interest rate is at 6.61%. You are aware that with most packages you can get 6.06% atm?

I know that doesn't answer your question but by the sounds of it, you have a few Mortgages. 0.55% can make a big difference depending on your level of debt.

It may also change your mind on fixing in rates if you are able to get a better variable rate.

Regards JO
 
On the "should you" question

One year fixeds can be good or just plain evil depending on where rates end up when u exit the fixed.

It has been said that the one year fixed may not be that flash seeing you can get variables as low as 5.72 ongoing if the lvr is lower than 75 %

5.72 to 6.61 is a fair sized gap

ta

rolf
 
Josho, what bank are you with? I thought my current rate fairly close to what the other banks were offering, looks like i need to do some more homework...

The other thing is i may have missed the boat on thoes 3-5 year fixed rates but putting it into perspective some benefit is better then non dont you think?
 
I consider myself a property investor/developer, not a speculator on IRs, hence I just pay market variable rates. Once you fix the next logical question is, would I short this market? and then you are in a whole new industry. At the end of the day the market is the market and you cant outsmart rates by fixing.
 
Tb

As I indicated in another thread the one year rate is not a bad option...but push CBA on the following:

1. Ask them to reduce the fix fee....alot of branch managers have discretion to reduce the fee from $300 to $150.

2. If you have a professional pack you should be able get 0.15% off the 6.64% to 6.49%.

The better pro package rate is now 5.91%...so you are only paying a 0.58% premium. I suspect you will break even on this by March/April 2010 as rates hit about 6.5% for the best rates with a pro pack discount.

I believe we will end up with rates close to 7% by late this year.

Hi All,

I believe we are no doubt going to be experiencing alot more interest rate rises yet before things settle, so the throught of fixing has been on my mind, expecially since the fixed interest rate is so close to our variable rate.

CBA has on offer:

Current standard variable 6.61% (inclusing if of the 37 basic point increase)

or

I can fix for 12 months @ 6.64%

It will cost me $300 per loan to fix so i will be basically up for $600 upfront.

What are all your thoughts on this, does this sound like a good opportunity to fix for 12 months, we are most definetly going to have a few more increases yet, so surely this is something to consider?

I am definetly no expert on fixing and to be honest i have never fixed before so all your views are very welcome.
 
Thanks Sash i didnt considering squeezing the banks a little on there fee, great idea! I have the wealth package so your exactly right i will be on 6.49% if i do choose to fix.

I think in my position im not trying to outstmart the banks nor will i be paying my property off in 12 months...

My aim is to simply cut some interest off my loans by potencially sitting on a lower interest rate for the better half of next years interest rate rises.

TB
 
Hiya TB

U cant oustmart a lender in the fixed vs variable game

They already have their margin on any fixed rate hedged because they have passedthat risk to someone lese, so regardless if rates go up down sideways, the lender wont loose their margin.

ta
rol'f
 
Josho, what bank are you with? I thought my current rate fairly close to what the other banks were offering, looks like i need to do some more homework...

The other thing is i may have missed the boat on thoes 3-5 year fixed rates but putting it into perspective some benefit is better then non dont you think?

Hi tb,

I believe Sash beat me to your answer.

However, 0.58% can mean a lot of interest over a year depending on your debt level. You need to really nut this out soon and work out what the best way forward is.

Guessing what interest rates will be in three years is just that - a guess.

How good are you with a calculator? If you need some help, feel free to PM me.

I believe you have missed the boat on the 3-5 Fixed, but that is merely my personal opinion and not a professional one.

Regards JO
 
Thanks for all your thoughts, at this stage im going to have to sit down with a calculator just like josko said and figure this out the best way i see feasible becuase at the end of the day we are only taking educated guesses, there is no right or wrong answer.

Cheers,
 
Hi All,

I believe we are no doubt going to be experiencing alot more interest rate rises yet before things settle, so the throught of fixing has been on my mind, expecially since the fixed interest rate is so close to our variable rate.

CBA has on offer:

Current standard variable 6.61% (inclusing if of the 37 basic point increase)

or

I can fix for 12 months @ 6.64%

It will cost me $300 per loan to fix so i will be basically up for $600 upfront.

What are all your thoughts on this, does this sound like a good opportunity to fix for 12 months, we are most definetly going to have a few more increases yet, so surely this is something to consider?

I am definetly no expert on fixing and to be honest i have never fixed before so all your views are very welcome.

Depends on your situation.

If you are able to pay down your debts above the minimum repayments, then fixing is pretty much a waste of time and no saving.

My preferred option. ;)
 
No quite true...it depends on the bank and when you fixed in the cycle.

I fixed most of my loans (about 80%) between 5.24% -5.79% and if I break it will cost me nothing as they do it on economic loss...in this case the funds tey purchase can be relent to someone else at a higher rate. However, if I switch banks I will be up for $700.

It is question of timing and strategy....and knowing your worst case scenario if you break a loan. In most cases it is about $700-$1000 for me.

Oh yeah, don't i know it!! Fixed is (mostly) for the Banks. they are the beneficiaries because they know they have your money for that time period...u ain't gonna break with them.
JB
 
I can fix for 12 months @ 6.64%

????
You'd be mad to fix, in fact you should be running away from this lender because you are probably paying too much...

Is it a non bank lender you are with?
I have 1 IP with a non bank lender which is hurting a little at 6.86%
but I'll take the exit hit and move it away because I've had enough.

What's your LVR like?
Have you got any other loans?
You often get a discount if you combine loans with 1 lender.

Otherwise go for someone like Homeside, instant discount and you won't need to fix
http://www.somersoft.com/forums/showpost.php?p=615865&postcount=2
 
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