Is anyone fixing their loans?

Congrats to all who fixed & got some great rates :)

Just wondering if anyone who is currently on variable is looking at fixing with all the hype about rates hitting 8 & 10%?

I know historically variable has worked out better than fixed over a long period. However, the world seems to be in a rather unique economic situation at present, (rates historically low, the China bubble, Greece not looking so good etc etc), is it wise to fix at 8% now?

Interested in everyones' thoughts...thanks :)
 
No.

But... if you think 10% is a possibility and that it could bring your house of cards down, fix for 1 year at a time at most...

If you fix later in the cycle, shorter is better.
 
not for me.

I know a wise investor who says lock in for 5 years when you can get under 7% and leave variable if you can't.

He has done very well .

Personally I have never had a fixed loan and just ride the rollercoaster:)
 
We fixed two loans last year, and fixed for two years, so those two are requiring to be prepaid in June.

We are looking a fixing a further loan, possibly only for one year to bring our expenses into this financial year.
 
Thanks JIT, Bigtone & wylie,

Very much appreciate your views.

JIT sagely advice! Just wondering why you say fix for a shorter time?

Like the 5 yr 7% 'rule' Bigtone :)

Wylie, do you fix your loans & then prepay the interest?

Thanks again for sharing :)
 
In 2007 I fell for the 10% plus talk and locked in at 7.25% for 5 years. In doing so I completely missed the low rates.

I will not do that again. Variable for me.
 
Wylie, do you fix your loans & then prepay the interest?

That is what we do. I have been lucky before to fix and have a lower rate when they were rising, but the last five months of that two year fix we were paying more than the current rate, so I am not a fan of fixing, but to prepay, it is a necessity.
 
not for me.

I know a wise investor who says lock in for 5 years when you can get under 7% and leave variable if you can't.

He has done very well .

Personally I have never had a fixed loan and just ride the rollercoaster:)

Sounds smart to me.

I'd just add the Caveat that you don't fix if you are planning to sell within the period.

I normally never fix but did so a few years back at 5.8% for three years. Turned out to be the right call. But from my limited experience most people end up fixing and wishing they didn't.

Ciao for niao
 
I considered fixing our loan for 10 years at 7.05%. However I decided against it because of the limitations of a fixed rate. At the moment we are paying 5.98%. (honeymoon period which ends in Janurary)

I doubt I'll ever fix a loan becuase of the limitations that it brings.
 
interesting isnt it.
2 years ago we fixed and prepaid interest in June at 9%. Then last year it was negotiated to 4.89%. Both one year rates.

So average wasnt horrible, just took 2 years to do it.

With interest in advance, I really dont like doing it for more than a year anyway. Locks you in way too much. It also leaves you open to refinance somewhere else, where if you've got a 2-4 year interest in advance you cant get this.

Small note is that ANZ allow you to fix for a year and get 100% offset which might come in handy depending on your circumstances. A few others do it for longer terms.
 
Interesting opinions here.
Personally my decision is based on when i BUY the property.

I like to invest not speculate.
Part of my insurance when investing is to insure as many things as possible.
For property the greatest risk is interest rate exposure. I fix this problem by fixing for as long as possible a good proporiton of the debt.

If things dont stack up on a long term fixed rate, i think very carefully about buying.

Its interesting because the last time i fixed was in 2007 for periods ranging from 10 to 20yrs. The rates were good ranging from 7.08% to 7.28%.

Whats even more interesting is with the change in the environment, when i got the properties revalued, the bank OFFERED ME MONEY to remove the fixed rates.

I agreed on some of the fixed loans as i needed the revaluations to invest in the stock market.

Also now that i am in partial disposal phase on properties, its working out nicely as i just pay back the bank loan.
 
not for me.

I know a wise investor who says lock in for 5 years when you can get under 7% and leave variable if you can't.

He has done very well .

Personally I have never had a fixed loan and just ride the rollercoaster:)

Just checked the latest 5 yr rates at Westpac

Fixed Options (fixed for 5 years) 8.14% p.a.

We have a previous 5 year Fixed Loan (6.89%) due in SEPT this year, the world's only just come out of the GFC, USofA still has problems, Greece has been thrown a life preserver and here we are, we're at 5 yr rates beyond what they were in 2005 :eek:

The brief 4.99% for 3 yrs from Westpac was a nice offer for those that got in whilst the window of opportunity was open
 
we have about half fixed for 3 years at 5.19% (2 years to go) but we are considering having a couple on a one year fixed rate while we sort out some cashflow issues we are having. None of the rates offered for 2years or more are of any interest to me at the moment ( pardon the pun)
 
I won't be fixing at 8% - far too high in my opinion. I can ride out any high rates. My IP is fixed until 2014 at 5.19% which I'm very pleased about (that came by from a bit of luck) but my PPOR is variable and isn't so large as to effect me too much if rates go 10%, I can manage. I saw too many comments on here about people fixed at 7 and 8% a year or so ago wanting to break out of it as they were missing the low variable. High rates never last (at least I hope they won't!), so I'd rather ride it out and wait for them to go low again.
 
Just checked the latest 5 yr rates at Westpac

Fixed Options (fixed for 5 years) 8.14% p.a.

the world's only just come out of the GFC, USofA still has problems, Greece has been thrown a life preserver and here we are, we're at 5 yr rates beyond what they were in 2005 :eek:

Thats facinating Redwing.

Perhaps the AU banks are really concerned about the Aussie economy overheating. I agree that its a very strange thing that the outlook for fixed rates is higer today than in pre GFC times. It seems a strong recovery globally is on the cards.

MJK
 
We have all our lending at variable and always have (and probably always will). Since 2006 when we started investing our ir started @ 6.62% went as high as 8.8% and dropped as low as 5.01%. We are currently on 6.01%. We believe in building up a buffer (via offset accounts) in periods of lower ir so when higher ir hit we are cushioned.

It is similar to how some super funds don't pay all their returns in times of high returns but keep some in a 'reserve' fund for rainy day when returns are lower or even -ve.

I consider fixed rates to be like an 'insurance policy' with a built in premium to be paid by the borrower to the provider of the policy (i.e. lender), which is why most borrowers are better off in the long term using a strategy similar to what I have described above rather than fixing rates. There are always exception though such as thoughs on very tight budgets and or fixed incomes who need absolute certainty.
 
Thanks very much to all who offerred their opinions & shared their experiences! Kinda confirms my lean towards staying variable.

I think we will ride the rollercoaster & shore up our cash reserves in the meantime to cope with any rises.

We have about $11K redraw in our PPOR loan. Does anyone know if we can simply move it into our offset a/c if things get tight & use it to pay the loan for a while? (We also have some $$$ in shares which we can cash in for emergencies.)

Thanks in advance :)
 
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