Browse Forums Home Finance 1 Feb 03, 2009 1:46 pm With another 1% drop in interest rates today we are seriously considering our options with regards to our ANZ mortgage. We are currently on a variable Breakfree package and wondering what the pros & cons are of fixing, or even splitting?"
I know that it will cost $200 to change fom variable to fixed - just want to know whether it is a smart move - dont want to be too greedy and wait for it to drop even further. Re: Home Loan & Interest Rates - to fix or not?? 2Feb 03, 2009 1:52 pm My answer is that the banks know more than you - I think fixing almost always works to the banks advantage.
You sound like you are waiting for the right time to fix - my advice is to ride it out with variable - almost certainly be better off and have a more flexible loan; fixed loans tend to have limitations on extra payments, redraws and things like that, as well as haveing a higher average interest rate over the life of the loan. Re: Home Loan & Interest Rates - to fix or not?? 3Feb 03, 2009 1:54 pm If you can I would wait for another month and weigh it up then.
Could be another .5 % or .75% yet to come. Cheers Michael He wants a dream home theatre - she wants a dream kitchen! Re: Home Loan & Interest Rates - to fix or not?? 4Feb 03, 2009 2:05 pm my mortgage broker recommended keeping an eye on the fixed interest rates, i cant recall what he said i need to recheck but he said when the 7 yr rate starts to level out with the variable its about to start going the other way so lock in Blog - http://snakedr.blogspot.com/ Build Thread - viewtopic.php?f=31&t=12084&p=307406#p307406 Status - PCI 15/10. Things nearly done. Fixing home loan rate, variable versus fixed 5Feb 03, 2009 2:17 pm Helyn My answer is that the banks know more than you - I think fixing almost always works to the banks advantage. You sound like you are waiting for the right time to fix - my advice is to ride it out with variable - almost certainly be better off and have a more flexible loan; fixed loans tend to have limitations on extra payments, redraws and things like that, as well as haveing a higher average interest rate over the life of the loan. I agree with you again Helyn. Last night on ABC, they polled five leading economists on their estimates for the cash rate for end of 2009 and they all said it will be much lower. The lowest estimate was 2%. Re: Home Loan & Interest Rates - to fix or not?? 6Feb 03, 2009 2:44 pm Also other thing to concern, Thlo correct me if im wrong, you can't get a redraw on a fixed.
I was told put everything you can into the loan now while its lower, for us we dont have other commitments (ie kids), use it as a saving account IF you need to, you can redraw on it! Thats what our brokerage told us to do use it as our savings and long term we will be better of, but must be variable to do so! For us we were going to wait till they start saying its going up before considering to fix it! Thlo, if l've been told correctly about variable for a redraw, what happens if you do 50 50?? home loan redraw and 100% offset while fixed 7Feb 03, 2009 3:06 pm woodsey Also other thing to concern, Thlo correct me if im wrong, you can't get a redraw on a fixed. For 99% of lenders out there, that's correct. Your extra repayments will be locked in until the fixed term runs out. woodsey I was told put everything you can into the loan now while its lower, for us we dont have other commitments (ie kids), use it as a saving account IF you need to, you can redraw on it! Thats what our brokerage told us to do use it as our savings and long term we will be better of, but must be variable to do so! Thlo, if l've been told correctly about variable for a redraw, what happens if you do 50 50?? If you do 2 splits, keeping one as variable then redraw will be available on that portion. Some lenders can give you a transaction account with offset facility attached to fixed rate loan, so there won't be any need to make extra repayments and use redraw. You can even have 100% interest offset connected to a fixed rate home loan. Re: Home Loan & Interest Rates - to fix or not?? 8Feb 03, 2009 3:10 pm Thanks! Gives us something to think about when the rate looks to go back up!!
Our broker ended up going broke before our land settlement so tried learning ALOT myself, but there is sooo much to know and it does get confusing at times! Re: Home Loan & Interest Rates - to fix or not?? 9Feb 03, 2009 3:12 pm We're trying to figure out whether we are better cutting our payments to bare minimum and putting the rest in our offset account (which helps with the interest anyway and is easily accessible) or paying more on the mortgage and not really "seeing" or being able to use the money. Re: Home Loan & Interest Rates - to fix or not?? 10Feb 03, 2009 3:15 pm McReidy We're trying to figure out whether we are better cutting our payments to bare minimum and putting the rest in our offset account (which helps with the interest anyway and is easily accessible) or paying more on the mortgage and not really "seeing" or being able to use the money. Depends on your level of discipline. Re: Home Loan & Interest Rates - to fix or not?? 11Feb 03, 2009 3:24 pm woodsey Thanks! Gives us something to think about when the rate looks to go back up!! ........there is sooo much to know and it does get confusing at times! You're welcome woodsey. Don't worry about it being confusing. I have only met two people in banking whom I would consider to know almost everything about lending (and they are approaching retirement age). Re: Home Loan & Interest Rates - to fix or not?? 12Feb 03, 2009 8:51 pm i think I would be waiting and watching as there may be more cuts on the way finished building 40 square home on 5 acres with perry homes.working on the landscaping just finished pool deck with ://forum.homeone.com.au/viewtopic.php?f=31&t=2217 Re: Home Loan & Interest Rates - to fix or not?? 13Feb 03, 2009 9:10 pm McReidy We're trying to figure out whether we are better cutting our payments to bare minimum and putting the rest in our offset account (which helps with the interest anyway and is easily accessible) or paying more on the mortgage and not really "seeing" or being able to use the money. If you are planning to purchase a 2nd house in the near future and plan to borrow against your property, paying off some of the principal is better. Re: Home Loan & Interest Rates - to fix or not?? 14Feb 03, 2009 10:00 pm McReidy, wouldn't you be better off paying as much as you can on the mortgage and haveing a re-draw facility so you can get the surplus payments back if you need them? Re: Home Loan & Interest Rates - to fix or not?? 15Feb 03, 2009 10:03 pm I wouldn't fix anytime soon...
Things are only going to get worse.. I hope they don't but it doesn't look good.. and I see 0% interest rates on the cards for Australia within the next 12 months. Re: Home Loan & Interest Rates - to fix or not?? 16Feb 03, 2009 10:15 pm wakeboardandy I wouldn't fix anytime soon... Things are only going to get worse.. I hope they don't but it doesn't look good.. and I see 0% interest rates on the cards for Australia within the next 12 months. Really? A litlle unprecedented...and virtually impossible. Where did you come up with this figure from? What basis for the claim? Re: Home Loan & Interest Rates - to fix or not?? 17Feb 03, 2009 10:31 pm mattwalker wakeboardandy I wouldn't fix anytime soon... Things are only going to get worse.. I hope they don't but it doesn't look good.. and I see 0% interest rates on the cards for Australia within the next 12 months. Really? A litlle unprecedented...and virtually impossible. Where did you come up with this figure from? What basis for the claim? Just my opinion.. but US rates are at nearly 0% and will probably hit 0% very soon (so it certainly is possible).. I don't see us being very far behind.. I know that these constant interest rate drops must be hard to hear for people on fixed rates though.. and isn't virtually impossible an oxymoron! 6 months ago people were telling me interest rates are only going to get higher... I was singing up for a loan at that time and went against the mortgage brokers advice as I thought interest rates could only go down from there, I was right but I didn't predict it to drop this quickly and by this amount. Re: Home Loan & Interest Rates - to fix or not?? 18Feb 03, 2009 11:13 pm wakeboardandy I wouldn't fix anytime soon... Things are only going to get worse.. I hope they don't but it doesn't look good.. and I see 0% interest rates on the cards for Australia within the next 12 months. I suspect you mean 0% cash rate...the rate charged on overnight loans between financial institutions...for instance in the US were the Federal Reserve has set a cash rate range of 0 to 0.25%. This cash rate then influences all the other rates upon which our economy is based. A zero per cent mortgage rate makes no sense and is impossible...no virtual about it. Based on the current margin between the cash rate and mortgage rates, a target range of 0 to 0.25% would bring mortgage rates down to about 2.65%-ish. If you do a bit of internet research on "zero interest rate bound" you find that central bank economic theory becomes a bit hairy around 0% and "non-standard" policies come into play. Here's hoping we stay "standard".... mmm....donuts Homer Simpson 1956- Links: Site Costs Ready Reckoner | H1 Addiction Medical Advice | Château TDL: The Backyard Re: Home Loan & Interest Rates - to fix or not?? 19Feb 04, 2009 12:16 pm wakeboardandy Just my opinion.. but US rates are at nearly 0% and will probably hit 0% very soon (so it certainly is possible).. I don't see us being very far behind.. Be careful tdl, she've been spot on before with her predictions. The economists' predictions are for a 2% cash rate in 2009 anyhow, not too far from 0%. Re: Home Loan & Interest Rates - to fix or not?? 20Feb 04, 2009 12:26 pm thlo wakeboardandy Just my opinion.. but US rates are at nearly 0% and will probably hit 0% very soon (so it certainly is possible).. I don't see us being very far behind.. Be careful tdl, she've been spot on before with her predictions. The economists' predictions are for a 2% cash rate in 2009 anyhow, not too far from 0%. She is a he...and I was not arguing the 0% cash rate...but clarifying the difference between an "interest" rate of 0% (i.e. mortgage rate) and a "cash" rate which is a financial mechanism for economic control. And I'd argue that the difference in 2% cash rate and 0% cash rate in economic terms is a vast chasm given that that monetary lever is effectively lost. And I watch ABC as well and saw the economists predictions...and how right have they been in the recent past. mmm....donuts Homer Simpson 1956- Links: Site Costs Ready Reckoner | H1 Addiction Medical Advice | Château TDL: The Backyard The biggest challenge will be if you take out a loan and then run out of money - you'll have an incomplete security and lenders do not like this so you can get stuck.… 2 19068 Hi, you've probably already resolved this, however, Commbank will probably pay the funds to you after you send evidence the work is done regardless the change in the quotes. 1 35305 |