New buyers... Fix or variable
- Thread starter IndexFund
- Start date
Yeah true is it hard to fix the loan once you go variable? (newbie here)
Not really, but it's likely that the new fixed rate will be higher than it is now.
Fix rates for certainty. Punt on interest rates only if you have the resources to pay the bill if you bet wrong.
e.g. if a 0.5% increase in rates would drive you over the edge, I would recommend fixing.
Alex
If you get a wealth package (CBA) from your lender you can save .7% on your variable rate. This will bring the variable down below what they are offering for fixed rates. I would be inclined to go variable at this stage and wait and see. My personal opinion is the variable rate will reduce by about 1% in the next 12 months.....but who knows. Like Alexlee says if you can't afford to pay more than the current fixed rates then fixing your rate now can give you the certainty of what your repayments will be. You could also split the loan and put some on fixed and some on variable.
current CBA 1yr/3yr/5yr fixed rates are lower than current.
is that trap though to make you think they're going down so you stay variable....? or are they always a little lower?
is that trap though to make you think they're going down so you stay variable....? or are they always a little lower?
it would indicate CBA doesn't expect rates to be higher in the medium term.
Personally I don't think we will see rate reductions, but rates should remain steady in the short term.
As Stuart Wemyss points out in his excellent new book "Smart Borrowers' Handbook" (no affiliation), the main potential negative of fixing interest rates is that lenders often concurrently remove some of the flexibility of the loan. So check whether fixing, for example, prevents you refinancing, prevents extra repayments and/or eliminates the ability to use an offset, etc (or at least requires heft break fees to do these). It may be that these limitations are acceptable to you, but it's another factor to consider apart from just the issue of where interest rates are going.
I'd also point out that over the long term, RBA research shows that you're nearly always better off on a variable rate than fixed, but as rightly pointed out by previous posters, that's academic if you can't afford to ride out any rates rises in the shorter term.
I'd also point out that over the long term, RBA research shows that you're nearly always better off on a variable rate than fixed, but as rightly pointed out by previous posters, that's academic if you can't afford to ride out any rates rises in the shorter term.
just to throw a spanner into the above comment - we fixed for 4 years when rates were at 5% - only just come off it now for our new loan.
it was bloody brilliant.
it was bloody brilliant.
Hiya
its been said before, for PPOR use.
I believe its got little to do with picking where rates are going, more to the point managing risk or at least, perceived risk
In general, if you can "self insure" then go variable, if you will get pushed over your comfort level by a few rate movements, then fixed is likely better.
ta
rolf
its been said before, for PPOR use.
I believe its got little to do with picking where rates are going, more to the point managing risk or at least, perceived risk
In general, if you can "self insure" then go variable, if you will get pushed over your comfort level by a few rate movements, then fixed is likely better.
ta
rolf
I'm really not the expert here so i'll just chime in what I'm currently thinking of doing..
I'm thinking of fixing it for 1 year. Sounds like it's peaked but not exactly falling any minute so I could do with the slightly lower interest rate by fixing it for at least a year.
.. but i'm still swaying and listening to what people are saying
I'm thinking of fixing it for 1 year. Sounds like it's peaked but not exactly falling any minute so I could do with the slightly lower interest rate by fixing it for at least a year.
.. but i'm still swaying and listening to what people are saying
Yeah fix for 1-2 years would be ideal then variable.
Do you know what the new rate will be?
I'm curious as the commonwealth bank are currently giving 8.4% for >$20,000 for 6 months. There mortgage rate must be up near 10%.
Mike.
i can help you locate a good lender, but the biggest question i have for you and every one else will ask "IS YOUR CREDIT GOOD?"
