Given the punters are betting interest rate may come down soon, will you fix 4 years at 8.39%, or not fixing at all ? I haven't signed on the dotted line yet.
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will you fix 4 years at 8.39% now ?
- Thread starter oasis1frog
- Start date
No me....I personally think 4 years is too long. Given you can get 0.7% off the 9.32 standard rate.
Maybe one year fixed is okay as I believe rates will head down later this year.
Hi Oasis,
I recently fixed at 8.19 for 3years. Mainly because I know I can handle the holding costs at that level.
However 8.39 would make me think a little as today I heard Saul Easlake from the ANZ saying the next movement in rates will be down. Maybe next year sometime.
4yrs might be a little long but who is to say. Who knows what might happen tommorow.
Good Luck
Bill
I recently fixed at 8.19 for 3years. Mainly because I know I can handle the holding costs at that level.
However 8.39 would make me think a little as today I heard Saul Easlake from the ANZ saying the next movement in rates will be down. Maybe next year sometime.
4yrs might be a little long but who is to say. Who knows what might happen tommorow.
Good Luck
Bill
since the inception of the RBA's 2-3% target rate of inflation the interest rates have failed to go above 7.5%.
Conflicting messages
I heard tonight on the ABC news that more rate rises should be expected, and that contrary to what many believe, rates haven't hit the top of the cycle yet. It really is difficult to decide what to do with loans at the moment, especially with so many conflicting reports around.
I heard tonight on the ABC news that more rate rises should be expected, and that contrary to what many believe, rates haven't hit the top of the cycle yet. It really is difficult to decide what to do with loans at the moment, especially with so many conflicting reports around.
ABC news tonight saying next rate change is likely to be up given strong employment figures released today (avg. 4% unemployment across all states).
I'm getting a headache with all these different and changing forecasts.
All I want is price of gold to cut through $1000 like a hot knife through butter and Ramelius Resources (stock code RMS) to announce high grade gold intersections over many metres next week then my buffer is looking good (as opposed to sketchy).
Ajax
I'm getting a headache with all these different and changing forecasts.
All I want is price of gold to cut through $1000 like a hot knife through butter and Ramelius Resources (stock code RMS) to announce high grade gold intersections over many metres next week then my buffer is looking good (as opposed to sketchy).
Ajax
To fix or not is one of whether you can afford rates to move up on you.
Whilst the forecast on RBA might be to reduce rates, i can say that banks wouldn't bring them down if there was a move next week.
If we continue in this environment of tight liquidity then banks have two options the first is continue raising rates to cover higher cost of funding or ration credit. The later is a huge issue as it will result in slow down and this may happen if things continue in the medium term.
That being said I personally think 4 years is a long time.
Whilst the forecast on RBA might be to reduce rates, i can say that banks wouldn't bring them down if there was a move next week.
If we continue in this environment of tight liquidity then banks have two options the first is continue raising rates to cover higher cost of funding or ration credit. The later is a huge issue as it will result in slow down and this may happen if things continue in the medium term.
That being said I personally think 4 years is a long time.
Like everyone else I have no idea and with so many professional opinions all different ...who knows?
Ch 10 news today had some expert who used to be on the RBA board saying they have peaked! ... go figure!!
I have to make a decision on this next week and think I'll fix at 8.75 for 3 yrs.... or maybe 2....... not sure.
but .....
I wouldn't be doing 4 years.
Ch 10 news today had some expert who used to be on the RBA board saying they have peaked! ... go figure!!
I have to make a decision on this next week and think I'll fix at 8.75 for 3 yrs.... or maybe 2....... not sure.
but .....
I wouldn't be doing 4 years.
Thanks guys, I know fixing 4 years is too long, the reason to fix for 4 years instead of 3 or less is because it is 0.4% less. Serviceability wise I can handle further rate rise (of course prefer no more increase). Also my thinking is if remain variable we can pay down the size of the loan a bit and then the properties will be cashflow neutral. My best bet is to fix 50% only, but the loan papers are now ready and waiting for me to sign on the dotted line.
swings and roundabouts
I've mentioned this before in similar threads.
Margaret Lomas discussed the pro's and con's of whether to fix or leave as a variable rate in one of her books.
She did a comparison over a number of years, and it boiled down to being not much of a difference between the two.
Of course, the cashflow factor needs to be addressed; many people are "up to pussy's bow" with their repayments, and further increases will put them in significant stress.
Under these circumstances it is probably better to fix the rates, but then you are stuck with something that might end up being more expensive than it would when the rates drop back down.
If the rates drop back down to somewhere near the 2005-6 levels, then it would be a good time to fix for as long as possible.
I've mentioned this before in similar threads.
Margaret Lomas discussed the pro's and con's of whether to fix or leave as a variable rate in one of her books.
She did a comparison over a number of years, and it boiled down to being not much of a difference between the two.
Of course, the cashflow factor needs to be addressed; many people are "up to pussy's bow" with their repayments, and further increases will put them in significant stress.
Under these circumstances it is probably better to fix the rates, but then you are stuck with something that might end up being more expensive than it would when the rates drop back down.
If the rates drop back down to somewhere near the 2005-6 levels, then it would be a good time to fix for as long as possible.
Hi Oasis,
You could establish a Home Loan Interest saver account against a fixed loan. Thereby meaning that any extra cash you had could go into this account and reduce the interest you pay. At least it would give you some certainty that your repayments would not increase for the duration of the fixed loan.
If rates start coming down it is possible to go back on variable just before the variable rate matches the rate of your fixed loan. Then you can ride the variable rate down and fix it when you think the rates have reached the bottom of the cycle.
Regards Jason.
Hi Guys,
Interesting times isn't it. Well, I'm in the process right now of switching from WBC on my .8% discount to their standard variable rate to a 1-year fixed rate of 7.95% with Bankwest. After that it reverts to their variable. With WBC, I'd be around the 8.5% mark now so the 7.95% rate for a year helps to give me certainty of cashflow and also a nice little discount. On over $1M of borrowings, it is worth doing as the discount over 12 months exceeds my switching costs. These included $1750 in rate lock fees plus another $1500 early termination if I switch from Bankwest within 4 years, plus $800 per loan termination fee with WBC.
Its important to run all the numbers on switching costs relative your savings at the discounted rate before making a call. Note though, that the added benefit is security of those cash flows. If the RBA was to go up again, or the banks were to do so outside of the RBA, then my rate is still locked in. I'm willing to pay a premium for this certainty, though in my case I actually got that certainty at a discount to my current rate.
Cheers,
Michael.
Interesting times isn't it. Well, I'm in the process right now of switching from WBC on my .8% discount to their standard variable rate to a 1-year fixed rate of 7.95% with Bankwest. After that it reverts to their variable. With WBC, I'd be around the 8.5% mark now so the 7.95% rate for a year helps to give me certainty of cashflow and also a nice little discount. On over $1M of borrowings, it is worth doing as the discount over 12 months exceeds my switching costs. These included $1750 in rate lock fees plus another $1500 early termination if I switch from Bankwest within 4 years, plus $800 per loan termination fee with WBC.
Its important to run all the numbers on switching costs relative your savings at the discounted rate before making a call. Note though, that the added benefit is security of those cash flows. If the RBA was to go up again, or the banks were to do so outside of the RBA, then my rate is still locked in. I'm willing to pay a premium for this certainty, though in my case I actually got that certainty at a discount to my current rate.
Cheers,
Michael.
Maybe one year fixed is okay as I believe rates will head down later this year.
really?
http://www.news.com.au/business/story/0,23636,23380935-462,00.html
don't think so...
fix for 5 - 7 years, at least you know what your payment will be, even if rates go up or down..
If you're talking about Centro, it's because their loans were up for renewal and they couldn't renew their loans. Their cashflow was actually fine in that they could continue to make interest payments, I believe. They just couldn't renew their loans.
Alex
