Browse Forums General Discussion Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 41Feb 04, 2009 8:38 pm Fixed. Variable. Fixed. Variable.
The economy goes up and it goes down. If you were one of the people who fixed their rates then, unfortunately, you just have to suck it up and get on with life. That or pay the break out costs. And in my opinion, as long as you're (and I mean everyone who has any type of loan) paying interest on anything then the lender/bank will always be the winner. Oh, and I don't mean to sound harsh or unsympathetic to those on fixed rates because I am one of those people. I have another year to go. But I'm not losing any sleep because that was the decision we made and we knew that rates would either go up or down. At the same time I wasn't losing any sleep either when a lot of other people were panicking as the rates sky rocketed. [sneakersss] Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 42Feb 04, 2009 8:43 pm yvette72 see the story on today tonight im regard to fix loan these people fixed there loan at 18% so you tell me some one does not need to do something to help these people many people will lose there homes.You have your view and I have my view simple as that Ok I'll tell you someone doesn't need to help these people. Is the taxpayer/government also expected to bail out people who buy shares and the stock falls? Sorry, I don't think so....... People make financial decisions all the time... some good, some bad. In the words of YSSIM..... those that fixed "just have to suck it up"! I leave you to fend for yourself, figure things out yourself. Terrence Malick Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 43Feb 04, 2009 8:47 pm Oh and TDL.... you need to fix your quoting... I said that last bit in response to Kumar.
Edit: Quoting fixed... thanks TDL. I leave you to fend for yourself, figure things out yourself. Terrence Malick Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 44Feb 04, 2009 8:53 pm There is a very simple comparison that can be made to the people that now feel ripped off because they are trapped in a fixed rate loan.
Imagine that you have some money to invest and you decide to put it in a term deposit. The bank allows you to do this and guarantees a comparitively attractive return on your investment. Now imagine that because of the recent falls in the cash rate, the bank demands to alter the interest rate applied to the term deposit, which is a signed contract with the client. That's right, THEY CAN'T. STOP WHINING. Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 45Feb 04, 2009 10:18 pm The only thing I think is unjust about the current fixed rate vs variable rate system is the lack of public awareness of the break costs on fixed interest loans. I wonder how many people who sign up for a fixed interest loan are aware of the break costs.
Having visited brokers and banks in the past I can say that generally speaking they do not advise the customer of the rather significant potential costs. Brokers in particular really have something to answer for with this as most people believe that the broker will somehow protect them by making them aware of these things. You cant expect people to identify it in the contract either as it is not very well explained. I think people are slowly realising what a gamble they can be. Hopefully we dont keep hearing of people being financially ruined by having to break their contract on a fixed interest loan they can no longer pay - because as the rates go down its only going to get worse for them. Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 46Feb 05, 2009 1:23 am Eze The thing is that the banks (at least the Comms bank), don't calculate their losses that way. Like I said before To calculate this Early repayment they use the difference between my retail fixed rated and the wholesale fixed rate at the time the cancellation, so even if the situation was estable and the retail fixed rate now and then were the same and the wholesale rate now and then were the same I would still have to pay a lot of money. You guys keep ignoring this pertinent point Eze has made a few times (as it doesn't suit your aim to railroad him). Unconscionable conduct I argued for is not the fact that there are break costs in a contract willingly entered into by the borrower (you've been trying to distort this all day). Break costs are to compensate the bank if they suffer a loss because you won't keep your agreement. I never said anything to contradict this, neither did Eze. I am suggesting the imposition of unreasonable terms or non disclosure of conditions is in the way they calculate the loss the bank claims (as in Eze's example). Circumstances of the alleged conduct must be reasonably foreseeable by the stronger party, which I think it is. As the key part of the calculation is internal information to the bank treasury (it is not public and not open to scrutiny), the weak party has Buckley's chance. So in plain English again (so you dont attempt to distort again): the strong party dictates what its loss is using a variable that you are not privy to (banks say trust me I know what it is and you don't need to know) and the weak party does not have any right to even question whether the claimed loss is inflated or not. Not to be confused with Harold Re: Reserve Bank cuts interest rates by 100 basis point to 3.25% 47Feb 05, 2009 4:24 pm YSSIM Fixed. Variable. Fixed. Variable. The economy goes up and it goes down. If you were one of the people who fixed their rates then, unfortunately, you just have to suck it up and get on with life. That or pay the break out costs. And in my opinion, as long as you're (and I mean everyone who has any type of loan) paying interest on anything then the lender/bank will always be the winner. Oh, and I don't mean to sound harsh or unsympathetic to those on fixed rates because I am one of those people. I have another year to go. But I'm not losing any sleep because that was the decision we made and we knew that rates would either go up or down. At the same time I wasn't losing any sleep either when a lot of other people were panicking as the rates sky rocketed. Couldn't agree more. I'm another one with a fixed rate and whislt I was happy when rates were going up and I didn't have to worry equally I knew there was a risk of them going down. As far as I'm concerned the peace of mind I had was worth losing out if the rates go down. Obviously I'm not ecstatic that I could be saving money but at the end of the day I'm not paying anymore so really I'm no worse off except psychologically. When the fixed term is up in 12 months or so, if the fixed rate looks good, we'll do it again. I like peace of mind. Fixed rate break costs, exit fee, early repayment adjustment 48Feb 08, 2009 1:43 pm After all this heated discussion about the perils of fixing your home loan rate, I believe everyone should be aware of the potentially serious disadvantages of fixing your home loan interest rate.
The risk of being charged fixed rate break costs by your bank or non bank lender is not only when rates plummet and you wish to take advantage of the lower rates but also if you need to sell your home or discharge your mortgage for another reason during the fixed term. That sucks! Hope it all works out. Good to move away from steel anyway for all your reasons, but it's also thermally poor. 16 13759 How much are you ahead in payments compared to where the build is at? Have you fully drawn down the loan? 5 9176 |