What is a Treasury rate?

[Jom]

Hi all

I have just sold my PPOR (wanting to buy another bigger/better etc).

I have a loan of 210k fixed at rate of 7.89 through ING. There is 4 years left of the term and therefore my break costs will be expensive. I spoke with them on Friday and they said that the cost will be $13700. Apparently this is based on the lost they will make from me exiting the loan early.

This is basically comprised of a simple break fee of $1500, plus
(my rate) 7.89 on 210k * 4 years
minus
(treasury rate) 7.25 210k * 4 years

Question:
What is the treasury rate? who defines it? what is the treasury rate likely to be in 4 weeks (when settlement occurs)? I am thinking that this rate will be lower as there is another rate drop predicted at start of December.

Any help would be greatly appreciated.

Cheers
Jom

 

[StuartW]

I am only guessing but it’s probably an internal rate set by the banks treasury department (essentially being its 'cost of funds').

 

[whiteknightoz]

Not sure of this as I have never had to break a fixed loan but if you are getting the loan for the new place with the same bank will they lower the break costs to keep your business?