Commonwealth cuts fixed home loan rates below variable rate

[Sunstone]

Dear guys,

Article about CBA cutting their fixed 4 and 5 year interest rates tomorrow to below their standard variable rate.

What are the implications of this? With fixed interests rates you should pay a premium in order to have the "guaranteed security". When it's the other way round does this mean with the perceived instability in Iraq and the drought that some banks perceive that the reserve bank is getting ready for an interest rate cut?

What are others opinions of this?

Cheers,

Sunstone.




Commonwealth cuts fixed home loan rates

By allhomes staff

The Commonwealth Bank has reduced most of its home and investment home loan fixed interest rates by up to 0.2% effective tomorrow (Jan 31).

The bank is now offering 6.39% pa on its four-ear fixed rate, while the five year fixed rate drops to just 6.49% pa.

All the Commonwealth Bank's fixed home loan rates are now below 6.5%pa and below the bank's standard variable rate of 6.57%pa.

The bank is also offering introductory rates from 5.25%pa and savings of up to $600 on the standard establishment fee for both introductory rates and 3 year fixed rate loans over $80,000.

General manager Mortgage Wealth Lyndell Fraser said the bank's move reflected its competitive focus and decreases in wholesale markets rates.


Comments (for publication on this site) to: [email protected]

 

[Waverlybay]

Here are some more...

Bankwest - 3yr rate at 5.99;
HSBC have just moved 1 to 5yr rates to just the one rate @ 6.29; ANZ are at 6.15 for 3yrs;
St George have a 'professional pkg' as low as 6.19 for 5yrs.
ING is at 6.29 for 5yrs.

Anyone fix in the last 12 months ...and is still ahead? tsk tsk tsk. Fixing rates is a gamble in which the winner is more often the bank.

However, now is probably not a bad time to take a punt on the interest rate markets.... if such punting is part of your investment plans.

cheers

Waverly

 

[geoffw]

I fixed three years ago on one property at 7.7%, and thought I'd done a good deal.

My crystal ball is a bit fuzzy, sorry, I can't read the fiture now...

That's the gamble with fixing.

 

[Peter_Tersteeg]

Hey Geoff,

That is a bummer, but at least for those 3 years you know exactly what you're paying.

I agree that fixing rates is a gamble and the house (bank) usually wins, but it's also a strategy for knowing exactly what your outgoings will be. At least you won't be worried about over-exposure to rate increases.

Fixing rates should be a part of your risk mitigation, which means that when and how much you decide to fix depends of your personal position. If you can afford to see a rate rise through, you're probably better of with a variable rate. If a rate rise is going to hurt you, perhaps you should go for fixed.

 

[Sunstone]

Dear guys,

Thanks for the input.

Crystal balls. Yep and it's up to us to know what is happening.

Rolf/Simon any input on this?

What are your crystal balls telling you at this time of the year?

Cheers,

Sunstone.

 

[Rolf Latham]

Hiya Sun

Same as always.

Use fixed rates as an insurance mechanism against premature sales pressure.

Dont use fixed rates as a punt on the market. Stats say you will usually lose.

I used to have 2 worry warts for rates:

1. Inflation greater than 5 %
2. Unemployment less than 6 %
3. Aussie Battler above 60c US

Two out of those 3 and there is an excuse for the RBA to toss out the fiscal policy anchor.


Ta

rolf