Westpac drops 3yr fixed rate to 6.69% (indicative)
Westpac drops 3yr fixed rate to 6.69% (ind.)
- Thread starter Rolf Schaefer
- Start date
Hi Rolf,
I also noticed that, last week, CBA dropped their 3 year fixed rates as well, to about 10 to 15 basis points below their standard variable rate.
Could this mean that, despite many commentators hinting rates will definitely rise in the short term, a couple of major lenders might think the opposite is true?
Jamie.
I also noticed that, last week, CBA dropped their 3 year fixed rates as well, to about 10 to 15 basis points below their standard variable rate.
Could this mean that, despite many commentators hinting rates will definitely rise in the short term, a couple of major lenders might think the opposite is true?
Jamie.
interest rates and govt bond yields
I was going to refinance my whole portolio when they called the election with the expectation that rates were sure to rise. But I noticed the key indicator on the "cost of wholesale money", ie. govt. bond yields published by the RBA had shifted. The yield curve has flattened and inverted. So I'm holding off.
Usually, the rate of return between the 90 day rate is lower than the 5 year rate and the 10 year rate. That's what industry watchers call the "yield curve". When it's going up, it usually means the market is expecting a good economy and rates will go up. Now, the 5 year rate is lower than the 90 day rate and the 10 year rate is just a little higher than the 90 day rate. When the 5 year and 10 year rates dip below the variable, that's when the fixed rates start to move. It may have nothing to do with whether the RBA moves rates or not, but if you like fixed rate financing and are prepared to take a punt, the "wholesale cost of money" is going down for the banks and they're passing the savings on in the form of lower fixed rates.
If you want the daily auction rates for bonds and the underlying yield, here's the RBA link. The update the spreadsheet everyday and it's historical up to 10 years.
http://www.rba.gov.au/Statistics/OP10_update.xls
I've been watching five years rates and ING Bank and Heritage Building Society have dropped their rates to 7.1%. and the 3 year rates are pretty low too 6.89%
Jireh
Jireh
I was going to refinance my whole portolio when they called the election with the expectation that rates were sure to rise. But I noticed the key indicator on the "cost of wholesale money", ie. govt. bond yields published by the RBA had shifted. The yield curve has flattened and inverted. So I'm holding off.
Usually, the rate of return between the 90 day rate is lower than the 5 year rate and the 10 year rate. That's what industry watchers call the "yield curve". When it's going up, it usually means the market is expecting a good economy and rates will go up. Now, the 5 year rate is lower than the 90 day rate and the 10 year rate is just a little higher than the 90 day rate. When the 5 year and 10 year rates dip below the variable, that's when the fixed rates start to move. It may have nothing to do with whether the RBA moves rates or not, but if you like fixed rate financing and are prepared to take a punt, the "wholesale cost of money" is going down for the banks and they're passing the savings on in the form of lower fixed rates.
If you want the daily auction rates for bonds and the underlying yield, here's the RBA link. The update the spreadsheet everyday and it's historical up to 10 years.
http://www.rba.gov.au/Statistics/OP10_update.xls
I've been watching five years rates and ING Bank and Heritage Building Society have dropped their rates to 7.1%. and the 3 year rates are pretty low too 6.89%
Jireh
Jireh
Hi Ji
The HBS product has a special benefi though if you have a big portfolio and you can hedge with some 6.37 % offset with another lender.
HBS allows unlimited repay and redraw even on their fixed rates, so in effect you can have a capped rate.
ta
rolf
The HBS product has a special benefi though if you have a big portfolio and you can hedge with some 6.37 % offset with another lender.
HBS allows unlimited repay and redraw even on their fixed rates, so in effect you can have a capped rate.
ta
rolf
hIYA
I have clients that do the following, eg
600 k variable io loan at 6.37 % with 500 k in an offset acct
400 k fixed rate loan for 5 years at 7.10.
Simply take money from offset acct and park in fixed loan where variable rates are below 7.10.
if rates rise above 7.1 redraw from fixed rate loan and put back into offset.
Dosnt suit everybody for various reasons, but does work
ta
rolf
I have clients that do the following, eg
600 k variable io loan at 6.37 % with 500 k in an offset acct
400 k fixed rate loan for 5 years at 7.10.
Simply take money from offset acct and park in fixed loan where variable rates are below 7.10.
if rates rise above 7.1 redraw from fixed rate loan and put back into offset.
Dosnt suit everybody for various reasons, but does work
ta
rolf
Rolf,
are there any costs involved (bank fees etc) moving money around from one account to another.
You noted:
Could you expand -- is the off set account ($500,000) separate from the I/O loan of $600K. If yes, what is the rate for the offset account.
Your posts contain great strategies, but unfortunately, those of us "financially challenged"
find it hard going to understand. So any additional comment would be greatly appreciated.
Regards,
Helen
are there any costs involved (bank fees etc) moving money around from one account to another.
You noted:
Could you expand -- is the off set account ($500,000) separate from the I/O loan of $600K. If yes, what is the rate for the offset account.
Your posts contain great strategies, but unfortunately, those of us "financially challenged"
find it hard going to understand. So any additional comment would be greatly appreciated. Regards,
Helen
What are the tax implications of that Rolf?
