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Good question GaryK - one that's discussed a fair bit on the forums.
Fixing your rate shouldn't only be viewed based on the interest rate - there can be significant break fees involved should you sell/repay your loan and it reduces your flexibility to make changes.
A good reason to fix rates is part of a risk mitigation strategy - by fixing some/all of your portfolio you reduce your interest rate risk.
Cheers,
Redom
The point that interest rates are very low at the moment is extremely valid. From a price perspective, it's hard to imagine that rates will reduce further, but it could happen, or rates would stay where they are now for years which might render this argument invalid.
Thanks for the reply Redom.
I assume given historical Rates that the IR wont stay this long for years to come and given that only afew years ago they were at 7 and 8 percent, locking a fixed rate at around 5 would offset the exit fees and other fees that come with a Fixed rate ? Am I right? Am I missing something here ?
Thanks for the insight guys.
How can I split a portion of loan to a FR and the other to a VR and is their a 'standard' as to how much for each portion ?
Thanks for the insight guys.
How can I split a portion of loan to a FR and the other to a VR and is their a 'standard' as to how much for each portion ?
On the other hand, the government is effectively broke. It's politically dangerous to try bring the country back to surplus. With an aging population, restrictions on welfare and healthcare we could be seeing a long period of economic uncertainty. Today The Age ran an article saying our children would be the first generation to have it worse than their parents.
It could go up or down. Treat fixed rates as a risk mitigation strategy rather than a money saver.
Is there any reason why the OP couldn't start on variable and the moment interest rates start to rise (assuming it is only a 0.25% increase) he/she switch to fixed?