Dilema - fixed rates

V

virgo

Hiya

Due to Westpac's inefficiency, i find myself on the threshold of a (delicious) dilema.

If you recall, Westpac had a 4.99% 3 year fixed rate offer a few weeks ago. I pounced on that offer but to date, have just received the documents yesterday. Westpac has agreed to backdate the offer due to their "screw up" (pardon moi french).

Now is my quandary. The rates may(?) will (?) fall by 1% tomorrow(?) which will bring my variable from 6.11 to 5.11%.

If you were me, would you take up Westpac's offer? or stay variable?

Note: either way, i am cash flow positive on my IP! Delicious...

Cheers
jennifer
 
Could you speficy the product you are using with Westpac. I currently have a 6.21% which includes a .7% discount so your rate is great.
 
If I were me, I would definitely be sticking with the variable rate for now. 3 yrs @ 4.99 won't be so unusual to see in a few months, methinks.
 
Variable is 6.11% with possible 150+ bp cash reductions over the next two months.

The questions are;

* How much will the banks pass on? You will need at least 112bps to come out even in interest rate alone.

* Will there be even more cash rate reductions from the RBA?

* Likely movement in fixed rates over the next ~6 months

* Preference to have fixed rates and certainty of cash flows for next 3 years, by locking in now and not worrying about the above issues.

I vote variable (for now), but that is more in line with some of my own strategies & tactics which may not be consistent with yours.

Irrespective, nice dilemma to have :)
 
That's a quality problem to have virgo. ;)

I would echo the views above. Sit on variable and monitor over the next few months. Fix as they fall lower at a rate you're comfy with or on the first rise.

I fix my rates for my own SANF, which may different to yours. I've got a couple of fixed ones coming off later this year and will be keen to fix at a lower rate.

Monitoring the situation however is paramount as when rates do turn and head north they may not be in 25 point increments like the gently, gently way the RBA raised them over the last several years.

If they consider the climate has been over-stimulated, rate rises might rise in increments concommitant with the recents falls over the past few months.

This is not advice, merely my opinion. Still, as you state.....delicious :)
 
boomtown said:
Variable - but watch the ASX futures daily.
Click to expand...

Good point.

Here's the latest. They need a new scale for IR - they now off the chart, so to speak :)
 

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I will be buying in the next 4-10 weeks (hopefully I find something in that time).

My question is similar to the OP.

1. Should I go SVR then fix later in the year?
(From this thread I'm assuming yes?)

2. Do most lenders allow you to be flexible in switching between the two?

Note: This will be my first property so I don't have a loan as of yet, so I cannot refer to T+C.

Cheers,
Luke
 
YoungGun said:
I will be buying in the next 4-10 weeks (hopefully I find something in that time).

My question is similar to the OP.

1. Should I go SVR then fix later in the year?
(From this thread I'm assuming yes?)
Depends on your own strategy and SANF but if you agree with the najority of us that fixed rates will fall then go SV and wait to fix.
2. Do most lenders allow you to be flexible in switching between the two?
AFAIK, Yes. But they do charge so check this before deciding on a Bank. Also check that their current fixed rates are competitive, as HOPEFULLY they will remain so when the time comes that you want to fix. For example, Macquarie Bank has a very competitive SVR but fixed rates nearly 1% more than some other banks. Obviously it is harder for them to get this long term funding.
Note: This will be my first property so I don't have a loan as of yet, so I cannot refer to T+C.
If you haven't already done so, I suggest working with a good MB. They will know which lenders are better to deal with if you are looking at switching to fixed in the near future.

Cheers,
Luke
Click to expand...
Good luck with the purchase, BTW.
 
Most of my loans are variable, however I did fix 1 loan at the 4.99%. I would suggest seeing what happens tomorrow, but even if the rates do take a nice dive downwards, they might not be so generous with their fixed rates. This is why I fixed one on the low rate.

I am keeping an eye on the rates and will attempt to fix most of them at good rates. I am looking for longer than the 3 years for the rest of them though.
 
Ms Jade said:
Nice looking chart, Buzz. Can you please give me (and any other ignorant readers) an idea of how to interpret it? :eek:
Click to expand...

Very simply, it is what the 'market' is expecting RBA cash rates to be going.

Of course they can fluctuate greatly based on prevailing and changing economic circumstances. These charts would have been looking for different in January 2008.

The link is here
 
Same dilemma here. I actually gave my mortgage broker a call last week to put the settlement of refinancing on abeyance.

Had a further talk with my mortgage broker earlier this morning and he has indicated that there is a window of 2 months for me to consider whether to proceed to settle the refinancing with Westpac.

So I guess it will be a watching and waiting game for the moment.

Cheers,

LC
 
Interesting. I wonder whether this is being considered across the group of people who were re-financing to these WBC fixed rates.

If they defer from going ahead with the re-finance, and wait on IR movements, was the so-called fire-sale interest rate promotion becoming far less valuable to WBC?
 
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