How do you feel about a survey?
- Thread starter elwyn.d
- Start date
Gday elwyn.d , in 1996 l borrowed money at 9.9% fixed for five years and rates went south.Today in the Bendigo bank they are offering 5.95% with a $250.00 fee fixed for 1 or 2 years. Which way do you think they think rates are going to go ?l could not imagine a situation where l would fix rates again and doubt l could beat the banks at guess the rate game in any case. MITCH
I tend to agree with Mitch, fixed rates are the bank second guessing the market movements, with a conservative view too boot. If you do go fixed, its likely that the best you will do is break even against the variable movements.
But each to their own. One of the main reasons for going fixed is certainty of costs, not to necessarily to save money!
Cheers!
But each to their own. One of the main reasons for going fixed is certainty of costs, not to necessarily to save money!
Cheers!
G'day people,
For the very first time I tend to be an advocate of Fixed loans.....
Two (or is it 3??) years ago I was stating that there was nothing that indicated that rates should rise (I was wrong - they did, but shouldn't have...) but now, with Fixed rates around 6%, it seems to me to be a good choice to fix them.
Now, my thoughts are that fuel (oil) prices could escalate at any time (I was around in 1973 when oil screamed up - was it 50%?? - it seemed like it..) and that is a fore-runner of inflation in my opinion. It was in that year that my straight 8 Packard was "put out to pasture" - the cost of running it was just TOO MUCH!!!!
With long term interest rates AVERAGING around 10%, NOW seems to me a bl__dy good time to fix them. Yeah, I know, I could be wrong again. Well, I can live with that. And, of course, lenders "usually" allow you to FIX at any time - while going from fixed to variable can cost you mightily. So be sure you do your own DD on this one. I accept NO responsibility for what YOU decide - this one is (as always,
MY opinion only)
It's a personal choice - and after 3+ years, for the very first time, I'm advocating fixed loans. Could I be wrong? Absolutely!! I AM human!! Each of us do what helps us sleep at night. Good luck with your choice,
Regards,
For the very first time I tend to be an advocate of Fixed loans.....
Two (or is it 3??) years ago I was stating that there was nothing that indicated that rates should rise (I was wrong - they did, but shouldn't have...) but now, with Fixed rates around 6%, it seems to me to be a good choice to fix them.
Now, my thoughts are that fuel (oil) prices could escalate at any time (I was around in 1973 when oil screamed up - was it 50%?? - it seemed like it..) and that is a fore-runner of inflation in my opinion. It was in that year that my straight 8 Packard was "put out to pasture" - the cost of running it was just TOO MUCH!!!!
With long term interest rates AVERAGING around 10%, NOW seems to me a bl__dy good time to fix them. Yeah, I know, I could be wrong again. Well, I can live with that. And, of course, lenders "usually" allow you to FIX at any time - while going from fixed to variable can cost you mightily. So be sure you do your own DD on this one. I accept NO responsibility for what YOU decide - this one is (as always,
MY opinion only)It's a personal choice - and after 3+ years, for the very first time, I'm advocating fixed loans. Could I be wrong? Absolutely!! I AM human!! Each of us do what helps us sleep at night. Good luck with your choice,
Regards,
Dear Elwyn,
To properly answer that question one needs to know your situation.
There will always be pros and cons of using either. However I believe that when you have a number of loans reducing the risk on a portion of those loans is healthy and prudent business practice.
In this regard I agree with Les.
The last IO loan I have just taken out for a settlement at the end of the month I fixed for 5 years. The reason was that because I operate on gross yields of over 10% this certainty increases my SANF over that period. It also makes myself feel more comfortable about bringing forward the time frame of future deals because of the increase to my SANF.
Certainly I do not advocate fixing ALL of your loans but when you have a number .............. You should seriously consider this as part of your strategy.
Do you think that interest rates are going to be this rate in 2 or 3 years time? How would your situation be affected if rates went up 3 or 4 %?
Cheers,
Sunstone.
To properly answer that question one needs to know your situation.
There will always be pros and cons of using either. However I believe that when you have a number of loans reducing the risk on a portion of those loans is healthy and prudent business practice.
In this regard I agree with Les.
The last IO loan I have just taken out for a settlement at the end of the month I fixed for 5 years. The reason was that because I operate on gross yields of over 10% this certainty increases my SANF over that period. It also makes myself feel more comfortable about bringing forward the time frame of future deals because of the increase to my SANF.
Certainly I do not advocate fixing ALL of your loans but when you have a number .............. You should seriously consider this as part of your strategy.
Do you think that interest rates are going to be this rate in 2 or 3 years time? How would your situation be affected if rates went up 3 or 4 %?
Cheers,
Sunstone.
There is an interesting discussion in the 'General' foram from Bear294. I have 2 fixed loans and 1 Ver. Would have looked at a ver.loan tommorow. However there a feeling that we could see an inflationary period around 2004/6 based on some of those replies.I would still like to see 'an all things considered' graph from a fair wack of people who come here.
Its all crystal ball stuff, but it still adds to the fun!
Its all crystal ball stuff, but it still adds to the fun!
B
brains
Guest
They say when this worldwide economic slump is over, there is going to be the mother of all rallies (talking stockmarket) which will take the world economies with it.
I think the same is going to happen to the economy here, its going to take off and fly in the next 2-3 years in my opinion.
The governmnet will put on the brakes by raising interest rates as the always do and im sure rates will be at least 8-9% by 2005 0r 2006.
For the first time ever im considering fixing part or all of my loan interest rates, im thinking they are not going to get much (if any) lower then these record low rates and taking the above into account it could be a good time to fix.
I think there will be one more 25 point drop before they stabilise
and then rise.
Im no economist or clairevoyant, just my gut feelings and a little bit of educating myself.
Comments??
I think the same is going to happen to the economy here, its going to take off and fly in the next 2-3 years in my opinion.
The governmnet will put on the brakes by raising interest rates as the always do and im sure rates will be at least 8-9% by 2005 0r 2006.
For the first time ever im considering fixing part or all of my loan interest rates, im thinking they are not going to get much (if any) lower then these record low rates and taking the above into account it could be a good time to fix.
I think there will be one more 25 point drop before they stabilise
and then rise.
Im no economist or clairevoyant, just my gut feelings and a little bit of educating myself.
Comments??
I heard a radio report yesterday- though I don't know the source. I did hear BIS Shrapnel mentioned, but I'm not sure.
They were saying that the indications are that there is a boom coming up in the short term, as a number of rising economic indicators coincide. But they are then predicting, from about 2006, high inflation and interst rates- perhaps just into the double digits.
Probably it's no better crystal ball than any other- but with fixed interest for longer terms at a low level, I'll be looking to fix some of mine for a longer term when they come up for renewal.
They were saying that the indications are that there is a boom coming up in the short term, as a number of rising economic indicators coincide. But they are then predicting, from about 2006, high inflation and interst rates- perhaps just into the double digits.
Probably it's no better crystal ball than any other- but with fixed interest for longer terms at a low level, I'll be looking to fix some of mine for a longer term when they come up for renewal.
Hi elwyn,
Great question. In addition to what Sunstone and geoffw have posted, Id also suggest the property itself, and your investing window, have a great influence on what you do with the loan.
For instance, if you purchase a regional property that is highly positive (say 15%), then locking in a ten year rate slightly above the variable will not influence your position that greatly...
BUT... if you purchase a property that is highly negatively geared, and buying this property edges you closer to your serviceability wall, then every point on a loan counts.
What you do with your loans depends solely on the way you invest. For short term savings, you may choose variable... for long term SANF, you might go for fixed.
Its your decision
Jamie.
Great question. In addition to what Sunstone and geoffw have posted, Id also suggest the property itself, and your investing window, have a great influence on what you do with the loan.
For instance, if you purchase a regional property that is highly positive (say 15%), then locking in a ten year rate slightly above the variable will not influence your position that greatly...
BUT... if you purchase a property that is highly negatively geared, and buying this property edges you closer to your serviceability wall, then every point on a loan counts.
What you do with your loans depends solely on the way you invest. For short term savings, you may choose variable... for long term SANF, you might go for fixed.
Its your decision
Jamie.
Hi all,
I'm with Les on this one I think. I have always been keen on "the fix" and must say that even though I generally fix, yes I have lost a fair bit of money doing it. But at the end of the day with the way things are at present I generally feel that rates could go much further north than they are likely to go south.
Even though in the past I may have been better off with a variable rate I still accept the fact that at the time it was the best decision to help me have a certain level of comfort around repayments. I suppose it comes down to your own comfort level with risk ?
Cheers
PIppety
(as always, the above is purely my own opinion only )
I'm with Les on this one I think. I have always been keen on "the fix" and must say that even though I generally fix, yes I have lost a fair bit of money doing it. But at the end of the day with the way things are at present I generally feel that rates could go much further north than they are likely to go south.
Even though in the past I may have been better off with a variable rate I still accept the fact that at the time it was the best decision to help me have a certain level of comfort around repayments. I suppose it comes down to your own comfort level with risk ?
Cheers
PIppety
(as always, the above is purely my own opinion only )
I'll be needing to do some refinancing soon so this is a keen topic for me. I've generally preferred to go variable, and history has given that the better report card ... though that's an averaged result.
With rates where they are now, America's economy in the crapper ... not due to Iraq, which is only a distraction from the true problems, and the RBA's continuing love for ramping up rates to cure everything and anything. I reckon fixed for as long as possible must be the good oil for now.
With rates where they are now, America's economy in the crapper ... not due to Iraq, which is only a distraction from the true problems, and the RBA's continuing love for ramping up rates to cure everything and anything. I reckon fixed for as long as possible must be the good oil for now.
G'day people,
Sunstone made this comment:-
With Interest rates hovering around 6%, an increase to 9% or 10% is a HUGE impost!!!
This is one of my "hot buttons" as some of my long-term associates will attest. 3 or 4% is a deceptively innocuous statement (i.e. "It doesn't sound like much to worry about"). But work it out in YOUR situation, then reflect again on Sunstone's words - in a new light possibly.......
Regards,
Sunstone made this comment:-
Don't lose sight of the fact that a "3 or 4%" increase is going to be a 50 - 66% increase in YOUR ACTUAL PAYMENTS.
With Interest rates hovering around 6%, an increase to 9% or 10% is a HUGE impost!!!
This is one of my "hot buttons" as some of my long-term associates will attest. 3 or 4% is a deceptively innocuous statement (i.e. "It doesn't sound like much to worry about"). But work it out in YOUR situation, then reflect again on Sunstone's words - in a new light possibly.......
Regards,
That was then .... 2003
G'day all,
While searching for another post, I came across THIS one.
It's interesting to look back at "what we were thinking in Mar 2003". Funny thing is, not much has changed since then. Back then, my Interest rates were around 6.5% - and today, they're around 6.75%.....
Almost makes a mockery of other posts from around that time (bubbles bursting, etc.) - but then, hindsight is always far more accurate !!!
Regards,
G'day all,
While searching for another post, I came across THIS one.
It's interesting to look back at "what we were thinking in Mar 2003". Funny thing is, not much has changed since then. Back then, my Interest rates were around 6.5% - and today, they're around 6.75%.....
Almost makes a mockery of other posts from around that time (bubbles bursting, etc.) - but then, hindsight is always far more accurate !!!
Regards,
I remember when in the early 80's the interest rates were about 21%. We were building our house. Thankfully paid for it as we built. Did borrow at 21 % about 20K to finish the interior.
1990 bought the house I'm living in now. Interest rate was about 13% for a mortgage. Within 5 years our last mortgage rate was 5.75% (it was paid off then).
Within this time my ex brother and sister in law and many co-workers almost lost their homes because of the dramatic rises in interest.
I still have a small loan that is variable but for the sake of sleeping at night , the really big ones are locked in.
Like everyone is saying, it's your OWN comfort level and financial position that will dictate what you do.
1990 bought the house I'm living in now. Interest rate was about 13% for a mortgage. Within 5 years our last mortgage rate was 5.75% (it was paid off then).
Within this time my ex brother and sister in law and many co-workers almost lost their homes because of the dramatic rises in interest.
I still have a small loan that is variable but for the sake of sleeping at night , the really big ones are locked in.
Like everyone is saying, it's your OWN comfort level and financial position that will dictate what you do.
G'Day
Yes, since 2003 interest rates may have changed somewhat but opinions on what is 'best' must still differ circumstance to circumstance.
In October, 1989 I took our my first Business Loan. From initial negotiations with the bank, the rate changed from 22% in August to 22.25% in October.
By the time I sold the business in May, 1994, the business rate had dropped to 9.75%. It goes without saying that if I had fixed the rate it would have been financial suicide.
In August, 1994 I bought my first investment property. The variable rate at the time was about 9.25% and the fixed rate for two years was 8.75%. I was advised to fix and the variable rate dropped almost immediately.
Two years later I was again advised to fix at 8.5% for two years, and the variable rate fell again, to, I think, about 7.75%.
When averaged over the four years, the fixed rates were just about the same as the variable rates, certainly not enough difference to be remorseful abut.
Today, when discussing fixed and variable options, I look at creating a balance and mix of loan types as many borrowers also want the loan features such as off set accounts or redraw facilities. These features are not necessarily available during a fixed term period, so it is important to take all relevant circumstances into account when choosing not only loan products but loan features.
There is a whole lot more to appropriate and successful borrowing than just the interest rate or whether the rate is variable or fixed.
Cheers
Kristine
Yes, since 2003 interest rates may have changed somewhat but opinions on what is 'best' must still differ circumstance to circumstance.
In October, 1989 I took our my first Business Loan. From initial negotiations with the bank, the rate changed from 22% in August to 22.25% in October.
By the time I sold the business in May, 1994, the business rate had dropped to 9.75%. It goes without saying that if I had fixed the rate it would have been financial suicide.
In August, 1994 I bought my first investment property. The variable rate at the time was about 9.25% and the fixed rate for two years was 8.75%. I was advised to fix and the variable rate dropped almost immediately.
Two years later I was again advised to fix at 8.5% for two years, and the variable rate fell again, to, I think, about 7.75%.
When averaged over the four years, the fixed rates were just about the same as the variable rates, certainly not enough difference to be remorseful abut.
Today, when discussing fixed and variable options, I look at creating a balance and mix of loan types as many borrowers also want the loan features such as off set accounts or redraw facilities. These features are not necessarily available during a fixed term period, so it is important to take all relevant circumstances into account when choosing not only loan products but loan features.
There is a whole lot more to appropriate and successful borrowing than just the interest rate or whether the rate is variable or fixed.
Cheers
Kristine
