What is your current borrowing rate?

Gentle_Chief

Gentle_Chief

Hiya guys,

My borrowing with Westpac is at the 2.0 mil mark and my current rates are at 6.51%.

A question that pops in my head: Should I be looking to renegotiate at this stage with my banker?

I read elsewhere in this forum that NAB's rates are at 6.39% (0.85 discount from 7.24%). Is it time to pay a visit to the Branch manager....






________
 
We've got approx half your borrowings and currently on 6.56% variable with ANZ. So you're either about "on par" or with $2M you should do better! :p
 
My loans (all the loans are interrest only except the OnDirect one)

CBA - 227k @ 5.24% fixed till Aug 2011
242k @ 5.64% fixed till June 2011
6k (rest offset) @ 6.64% variable

Adelaide - 13k (rest offset) @ 6.74% variable
145k @ 5.74% fixed till Aug 2012
139k @ 5.59% fixed till April 2011

CUA - 200k @ 6.3% fixed till April 2011
118k @ 5.59 fixed till Oct 2010 (will be variable when it comes off)

One Direct 146k @ 6.84% variable

My feeling is that giving all your business to one bank removes your bargaining ability. Give them 700K and you will still get 0.75 to 0.85 discount off the standard variable.

I also keep my LVR at less than 33%....and also have a very large offset buffer.
 
sash said:
My loans (all the loans are interrest only except the OnDirect one)

CBA - 227k @ 5.24% fixed till Aug 2011
242k @ 5.64% fixed till June 2011
6k (rest offset) @ 6.64% variable

Adelaide - 13k (rest offset) @ 6.74% variable
145k @ 5.74% fixed till Aug 2012
139k @ 5.59% fixed till April 2011

CUA - 200k @ 6.3% fixed till April 2011
118k @ 5.59 fixed till Oct 2010 (will be variable when it comes off)

One Direct 146k @ 6.84% variable

My feeling is that giving all your business to one bank removes your bargaining ability. Give them 700K and you will still get 0.75 to 0.85 discount off the standard variable.

I also keep my LVR at less than 33%....and also have a very large offset buffer.
Click to expand...

Sash,

You're doing great with your interest rate management.

Have you calculated your WAIC (Weighted Average Interest Cost), as per this thread:

http://www.somersoft.com/forums/showthread.php?t=63216

My rough calculations suggest that you are at 5.83% pa (including offsets), 87% fixed, for an average of about 1 more year.

Well done!

Only thing I see is that the majority of your loans could revert to a massively higher variable rate across multiple lenders in around 12 months' time?

How will you manage this?

Cheers.
 
Last edited:
My lowest variable rate is 6.24% pa, but my WAIC is now 6.43% pa (including offsets).
 
Last edited:
Yes...that is correct my average rate is about 5.84%.

As for when the rates come off....I already have a plan around this. I am stashing everything in offsets at the moment. Currently I am paying about $78k per annum in interest (once the offsets do their thing).

The plan is by June 2011....my average rate will probably be about 6.75% (assuming no large increases in rates...I can't see this happening at this stage). On my portfolio this about another 11k in extra interest.

So how am I going to manage this? Well two fold - one put up my rents I have calculate that by June 2011 I should have increased rents between $6500 and $13,000 dollars, obviously this is dependent on the market. But my guess is with less FHB (most of my properties are low end) will translate into a stronger rent market.

Two,my agressive paying off of extra cash into offsets should eventuate between $100k-150k off the principal. One of the reasons I have paid off a lot principal via offsets is because I got a payment for long service and accrued leave when I left my last job 2 months ago. This reduction in interest payments should translate between $6k-$9K on interest savings.

So overall I will be better off between 1.5K and 10K depending on how well I go with the above. Even if this does not work...I am still tracking to a about a $30k per annum surplus after interest and all expenses. $11k off this still leaves me $19k positive CF....I just don't like to touch this buffer as it allows me to continually expand my portfolio with minimal CF risk.

I plan to buy more property as result.

Hope this helps.

JIT said:
Sash,
My rough calculations suggest that you are at 5.83% pa (including offsets), 87% fixed, for an average of about 1 more year.

Only thing I see is that the majority of your loans could revert to a massively higher variable rate across multiple lenders in around 12 months' time?

How will you manage this?

Cheers.
Click to expand...
 
Qlds007 said:
6.41% - Anz
Click to expand...

Good on you. Around the 6.4% seems to be my target too.
i.e. to get it about 10 basis points below my current levels.

Mind sharing your borrowing level Qlds007?

P.S: I have fixed an apointment with the branch manager for Monday, shall keep you guys posted how I go.....
 
sash said:
Y
So overall I will be better off between 1.5K and 10K depending on how well I go with the above. Even if this does not work...I am still tracking to a about a $30k per annum surplus after interest and all expenses. $11k off this still leaves me $19k positive CF....I just don't like to touch this buffer as it allows me to continually expand my portfolio with minimal CF risk.

I plan to buy more property as result.

Hope this helps.
Click to expand...

Thanks for that insight sash.
Sounds like a prudent plan.
 
I assure you i didnt post it to win any title.

Just to say that in the current climate your borrowing needs to fairly high to get a decent above normal discount or the Bank needs to want your business.

At the moment the later is unlikely so assume you can service the higher boorrowing you can but try. If anything as time goes by i think you will see lenders cut the discount offered not increase it.
 
Qlds007 said:
If anything as time goes by i think you will see lenders cut the discount offered not increase it.
Click to expand...

Thanks for your insights qlds007, but is this statement Legally possible?

Technically, we currently enjoy a 100 bps discount to the SVR. Can the Lender (Westpac) turn around and say "well, since our International cost of funding has gone up, we will have to reduce you Discount to 70 bps wef dd/mm/yyyy".....
 
Has already happened over the last couple of years. Nothing to stop a lender saying 0.4% discount from $250-$500K and 0.5% from 500 - 750K.

$750K + 0.7% max.

Also do you have the 100 bps in writing or was it like so many Wesuck customers who were granted it over the phone when they said they were going to refi away. That can be cancelled at any time and revert package to the applicable package fee.

Just wait for the Big 4 to put there rates up in the next 4 weeks or so.

All a matter of who wants to be first.
 
Qlds007 said:
I assure you i didnt post it to win any title.

Just to say that in the current climate your borrowing needs to fairly high to get a decent above normal discount or the Bank needs to want your business.

At the moment the later is unlikely so assume you can service the higher boorrowing you can but try. If anything as time goes by i think you will see lenders cut the discount offered not increase it.
Click to expand...

I wanna hear the Qlds007 story now lol
 
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