Fixed Interest

[WebBoard]

From: Mike .


Fix or not to fix?
From: Joe
Date: 1/9/00
Time: 11:29:51 AM

Last year we ventured into the wonderful world of property investement by purchasing two investment properties, and were advised not to fix the intersts rates.

We have recently seen interest rate rise and see threats that they will be rising again during the year... the dilemma is that the fixed rates are now up to 2% different to the variable rate... is it better to fix them?

Joe

 

[WebBoard]

Kathy

Reply: 1
From: Mike .


Re: Fix or not to fix?
From: Kathy
Date: 4/8/00
Time: 7:05:26 AM

Why pay the banks extra money? Go for the lowest rate whether variable or fixed - but fix short term not long. Go interest only for maximum tax deductions.

 

[WebBoard]

Les

Reply: 1.1
From: Mike .


Re: Fix or not to fix?
From: Les
Date: 1/12/00
Time: 10:38:11 PM

G'day Joe,

If I were Robert Kiyosaki I'd say FIX, FIX, FIX.
If I were Kevin Young (Investor's Club) I'd say don't fix yet!


MY observations are these:-

1. 5 years rates are ~ 8% which indicates to me that EVEN BANKS don't think things are going to "race up the charts". And Fixed Rates were quoted to me as being "always in the Banks' favour" (possibly why they DON'T charge you to change to them ...)

2. I even stumbled over a 10 year rate of 8.5% a couple of weeks ago - sounds like THAT would be the go if Fixed makes you sleep better.

3. Just this week, "which bank" dropped their 3 year Fixed Rate to 6.99% (against everyone else's 7.5 - 7.8)

4. Call me pig-headed if you like, but there is still so much competition, and with the technology boom keeping the lenders' costs down, I am sticking with Variable for the time being.

BUT - (there's always a "but" isn't there .. ;^) Keep in mind that 8% is still a LOW rate - and if it helps make you more comfortable to fix, then do it. Robert Kiyosaki would applaud the move, too.

And there's still the favourite "two bob each way" - split the mortgage in half, keep half variable, and the other half Fixed. It tends to be a popular compromise, especially when you consider that it costs nothing to go to Fixed - but just watch out if you want to flick back to Variable !!! That's a whole 'nother story - with all kinds of charges tacked on, so check out your "Exit" before making that Fixed decision. The "half-n-half" could be the safest choice if you are unsure.

And, the usual disclaimer - I am NOT any kind of Financial Adviser - just an ordinary bloke that has an opinion.

Let's see what other Forum devotees have to say too.

Les

 

[WebBoard]

Sue1

Reply: 1.1.1
From: Mike .


Re: Fix or not to fix?
From: Sue
Date: 1/15/00
Time: 7:59:13 PM

Dear Joe I'm with Les on this one. I worry a little about rates rising but just can't justify the big jump to fixed rates (except for the bank that recently dropped to 6.99%). I'm currently paying 6.35 variable and can't agree to fixing for 3 years at 7.05% which my bank was offering last time I checked. Its probably worthwhile to keep an eye on the fixed rates because they can tend to jump around a bit and the banks don't always advertise it. Cheers Sue