Thoughts on Fixed Rate from Brokers

[chilliblue]

Need some opinions.

Am looking at fixing a new purchase and have been offered 4.69% fixed for 3 years or 4.89% fixed for 4 years by St George.

This will be the only fixed loan so the advise I am looking for is:

- are the rates competitive

- is an extra year worth the higher rate

Thanks in advance

 

[jpcashflow]

Hi,

I just messaged you my view on fixed rates.

Cheers

 

[D.T.]

Hi,

I just messaged you my view on fixed rates.

Cheers

This isn't an open forum anymore?
Or are you just shilling for business?

 

[unloadmymind]

This isn't an open forum anymore?
Or are you just shilling for business?

true indeed!

i ignore private messages selling me new business when there have been little forum contributions from the PM sender.

 

[unloadmymind]

Are you able to take out a split loan so you can have the benefits of a variable full offset portion?

 

[Redom]

Need some opinions.

Am looking at fixing a new purchase and have been offered 4.69% fixed for 3 years or 4.89% fixed for 4 years by St George.

This will be the only fixed loan so the advise I am looking for is:

- are the rates competitive

- is an extra year worth the higher rate

Thanks in advance

Heya,

The rates are quite competitive. Can knock off another 10bp by going to ME Bank for the 3 year rate. They're very competitive on fixed rates, but have a pretty horrible variable offering (5.18 basic/5.38 standard).

Hmm i'd go with the 3 year rate with a 20bp discount. It ends up being a fair bit over 3 years (for a 500k loan, $1000 p.a. x 3).

I advise to think of fixed rates as a 'risk mitigation' tool rather than a pricing tool. If you've got a few IPs, it makes sense to manage interest rate risk by fixing a portion of your portfolio. From a pricing perspective, its really difficult to say whether variable rates will be higher than fixed rates over three years. Forward estimate assumptions on the state of the economy generally aren't to rosy (by RBA and Treasury) - indicating that rates may be low for a while yet.

Also fixing is very useful for high LVR loans. Lots of lenders charge an LVR interest premium (e.g. Macquarie, NAB, etc) on variable loans - this premium isn't charged on their fixed rates.

Overall though, its a pretty good deal.

Cheers,
Redom

 

[Redom]

Are you able to take out a split loan so you can have the benefits of a variable full offset portion?

This is a good idea - if you have multiple loans, generally good to have some of it variable.

If this is your one loan, great idea to split into variable/fixed split.

Cheers,
Redom

 

[Jamie M]

- are the rates competitive

Not too bad.

- is an extra year worth the higher rate

Depends on your motive behind fixing. Are you aiming to save money by beating the future variable rate or do you need the comfort of knowing what your repayments will be?

On a separate note - is this an IP or PPOR? Do you have any other mortgages?

Cheers

Jamie

 

[albanga]

Speak to your broker about the pros and cons of fixing loans. If you do not have one then there are lots of good ones here. Jamie and Redom who have posted are both fantastic.

I am not a huge fan personally of fixing as you lose flexibility and given the current economy then I personally believe they are only heading south of anywhere. Ofcourse I understand the benefits of risk mitigation as well though.