Risk management?
"Most economists" sometimes get things wrong. That said I do think the next move is more likely to be down that up.
ME Bank 3.99% 3 Year Fixed
- Thread starter almostthere
- Start date
"Most economists" sometimes get things wrong. That said I do think the next move is more likely to be down that up.
Unless you're confident your loan will be under 80% at the end of the fixed term I'd think again - the SVR the loan will revert to after the fixed period is really high and if you're at a high LVR you'll either have to wear it, or pay LMI again to refi out of it.
Is this the same if I were to go with Comm bank - 3yr variable @ 4.59% and reverts to 5%+ after 3 yrs?
For the first IP of many am I best to stay at 80% to start with?
Thanks
You wouldn't be reverting to 5% post 3yrs fixed - assuming rates of the day it would be floating around mid 4's, unlike ME Bank.
Not always, but if you're looking at short term specials like honeymoon rates or fixed term loan, it's better to sub 80% so you can move freely when the term ends.
Generally speaking honeymoon rates don't end up cheaper over time - they're literally a lure to get you in, and if you've paid LMI you're stuck there unless you fancy paying LMI again to refi out.
Which defeats the point of a cheap rate, really.
It automatically reverts to the rate saver rate which is 5.19% at the moment. Not particularly attractive.
Of course, if you're on the ball (or your broker is) you can change into a different product but the bank will be betting you won't do that. Most people forget.
Broker and I discussed this and suggested we would refinance - didn't mention about staying and changing product as CBA has plenty to choose from...
So maybe stay with the 88% LVR, and at 3yrs change product or (Refinance if LMI is now at 80%- unlikley as it will be IO loan and first IP)
All these fees are tax deductible but I see what you mean
Thanks Jess
Broker gets another commission payment in 3 years if they refinance you to a different lender.
A lot can change in 3 years, but there's a good chance the most cost effective thing to do would be to simply switch to a better product. This requires minimal paperwork and no further credit assessment. The only fees required would be the specific product fees. No government fees, discharge fees or possible LMI which you would get with moving to a different lender.
So now there's ME Bank and Newcastle offering 3.99% for 3 years. Teachers at low 4's. Macquarie incentivising P & I Fixed Rates with a 20bpts reduction last week. AOFM just secured a 20 year ( I think) bond at @2.4% ... Clearly money is getting cheaper, driven largely by the ECB I would say. So as more and more cheap money out of Europe needs to find a home , you can be almost certain that Australian banks are going to be able to secure some very cheap longer term funding, which should mean that 3-5 year fixed rates are going to get cheaper and cheaper in the coming weeks and months. But we shall see...
Does anyone know if ME bank have a minimum you have to borrow for the 3 year fixed? Im looking at a cheapie unit after the 20% deposit it would be under $150k.
Yes thats fine - minimum is $40k.
