Browse Forums Home Finance 1 Mar 02, 2009 12:51 pm hi all
We are up to loan stage and looking to get two loans, one for land and one for construction. Was thinking it now might be worth fixing one of the loans (both about equal amounts) for 12 months - (that is fixing in about a week's time after tomorrow's possible rate drop and giving bank time to adopt it, if they do!) I know there was a thread recently about this but can't find it But surely the Bank's rates can't go much lower...but when will they start to rise again?? Who's got the crystal ball???? Re: Would you 'fix' now? 2Mar 02, 2009 1:32 pm I think it will stay very low for most of this year atleast.
So I wouldnt look at fixing it for only 12 months, fix prices are still higher then the variable, and I just cant see it going up as fast as its dropped over the next year. Re: Would you 'fix' now? 4Mar 02, 2009 1:51 pm Yeah 3-5 year fixing is where its worth looking into.
Basically, you need to pick when we will pull out of the current economic slump and therfore when the reserve will start to increase interest rates to curb sharp growth. Fixed also has some disadvantages, most dont allow you to pay off extra, or limit how much extra you can pay off a year. Re: Would you 'fix' now? 5Mar 02, 2009 10:28 pm I wouldn't fix at the moment. The chance of variable going up to a higher rate than the average fixed rate is very slim. In fact i think we are more likely to see rates go down again before they go up. Re: Would you 'fix' now? 6Mar 02, 2009 10:54 pm Absolutely... the true interest rate for home buyers in the USA is 5%, not the 0% we see on the news.
At the very best, interest rates could go down, what???? 5%... more like 1%... but what's the upper limit??? well some years ago it was 17.5%. Fix, fix, fix,... Ed "ECOECO" At 'EcoEco', we design windows, we design the best windows, we do it for you, so that when you’re happy we are happy. Tel. 1800 326 326 Re: Would you 'fix' now? 7Mar 02, 2009 11:34 pm Couldn't find the other thread either - shame, as I was just going to copy and paste what I wrote in there
Sorry, Ed, beg to differ with you on this one - as I said in the other thread, I would never fix my mortgage. Banks know more than their customers and fixed rates nearly always work to their advantage in the long run. They usually have catches like higher account keeping and loan service fees, heavy exit or early payout fees, inablity to make extra payments, no re-draw facility etc - and the starting rate is always above the current variable rate, more so the longer the fixed term. I have always paid mortgages by 'pretending' the interest rate is more than it actually is and paying more than the mimimum repayment - this way you have a built in buffer for when interest rates rise and if you have a re-draw facility you can always get those extra funds back again if you need to. Hasn't been 17.5% for a very long time, Ed - in my experience not since the early days of our first mortgage, back in the late 80's Re: Would you 'fix' now? 8Mar 03, 2009 12:31 am Helyn Hasn't been 17.5% for a very long time, Ed - in my experience not since the early days of our first mortgage, back in the late 80's I am old enough to remember Paul Keating as treasurer during that time during "the recesion we had have". One key difference is the size of mortgages back then were much much much less, so the actual effect on households was less. Re: Would you 'fix' now? 9Mar 03, 2009 2:27 pm I will probably look to fix once our construction loan has been bedded down and we are in the house. Re: Would you 'fix' now? 10Mar 03, 2009 2:41 pm Helyn Banks know more than their customers and fixed rates nearly always work to their advantage in the long run. As a counter point though, those same banks had nfi when it came to the current financial crisis. So them predicting say a fixed of 5.5 or 6% assuming that in the long run it only goes up to 8-9%, assumes that they have a clue about the financial markets at this point in time - something I don't have much faith in at the moment. Having had a variable loan in some way or another for the past 20 years (including at a peak of 21% for some months), my family would consider fixing in this current economic climate due to the uncertainty of what could happen. Fix it for say 2-3 years is a viable insurance policy against hyperinflation or another 15-20% era. Re: Would you 'fix' now? 11Mar 03, 2009 2:49 pm I am currently fixed, and only did so as it was our first mortgage to adjust to such a large bill each month, however I would never fix again. Noel Whitaker a financial adviser who writes for the Courier Mail once wrote that it has shown that over the life of the average mortgage a person rarely comes out better off by fixing. In the future I am going to take my chances with the ups and downs of the market. Re: Would you 'fix' now? 12Mar 03, 2009 2:52 pm Helyn Couldn't find the other thread either - shame, as I was just going to copy and paste what I wrote in there Sorry, Ed, beg to differ with you on this one - as I said in the other thread, I would never fix my mortgage. Banks know more than their customers and fixed rates nearly always work to their advantage in the long run. They usually have catches like higher account keeping and loan service fees, heavy exit or early payout fees, inablity to make extra payments, no re-draw facility etc - and the starting rate is always above the current variable rate, more so the longer the fixed term. I have always paid mortgages by 'pretending' the interest rate is more than it actually is and paying more than the mimimum repayment - this way you have a built in buffer for when interest rates rise and if you have a re-draw facility you can always get those extra funds back again if you need to. Hasn't been 17.5% for a very long time, Ed - in my experience not since the early days of our first mortgage, back in the late 80's Interest rates haven't been this low for a very long time either. Definitely lock in. The banks don't work it like swings and roundabouts, they trade this "fixed" business to lenders who go for guaranteed income versus variable. So you lock this in and guarantee the lender x% for a fixed term, because those lenders would rather have the confidence than take the risk - it's a contract and that's why it is so costly to get out of it. The bank contracts the business to lenders, and the lenders hold the banks to those contracts. Lock in that rate... Ed "ECOECO" At 'EcoEco', we design windows, we design the best windows, we do it for you, so that when you’re happy we are happy. Tel. 1800 326 326 Re: Would you 'fix' now? 13Mar 03, 2009 3:10 pm Quote: Noel Whitaker a financial adviser who writes for the Courier Mail once wrote that it has shown that over the life of the average mortgage a person rarely comes out better off by fixing. In the future I am going to take my chances with the ups and downs of the market. Yes, my point exactly. Re: Would you 'fix' now? 14Mar 03, 2009 3:41 pm Check out....
https://forum.homeone.com.au/viewtopic.php?t=13465 https://forum.homeone.com.au/viewtopic.php?t=13458 You may also want to listen to http://www.theage.com.au/interactive/20 ... index.html There's plenty of good advice on why you should think twice about locking in your rate...if you do wish to take the gamble...and it is a gamble...no matter what anyone says...then remember you are contractually locked into that rate whether you rates go down further, you want to sell, refinance or for some other reason need to get out of the loan. In short don't winge if you are slugged a hefty break fee to get out of a seemingly attractive at the time fixed rate loan. mmm....donuts Homer Simpson 1956- Links: Site Costs Ready Reckoner | H1 Addiction Medical Advice | Château TDL: The Backyard Re: Would you 'fix' now? 15Mar 03, 2009 8:27 pm Thanks everyone, its nice to know that both opinions are out there. I guess, like most things, it is a personal choice that you have to be happy with - we've decided that fixing works if you really need to know your maximum repayments but with a bit of room to move in the budget, taking the chance with a variable is not so bad...
Quote: I will probably look to fix once our construction loan has been bedded down and we are in the house. I think this is what we'll do too... Funny that no one has mentioned hedging bets by fixing half and leaving half variable... Re: Would you 'fix' now? 16Mar 06, 2009 11:42 pm Helyn . Banks know more than their customers and fixed rates nearly always work to their advantage in the long run. They usually have catches like higher account keeping and loan service fees, heavy exit or early payout fees, inablity to make extra payments, no re-draw facility etc - and the starting rate is always above the current variable rate, more so the longer the fixed term. This just isn't true. I fixed for 3 years in Jan 06 at 6.4% when the prevailing SVR was 7.3%. Of the 36 months I was fixed, I was ahead in 35 of those months. The average monthly rate differential I "won" by over that time was 1.69%. I have a big mortgage and this call to fix saved me tens of thousands of dollars over the 3 years. I haven't re-fixed yet, but do expect to do so (80% of the loan) for a 5 year period some time over the next 3 - 6 months. I think this is a very very low risk option in relation to early payment penalties. When you consider that the variable rate most people are paying is at it's lowest since late 1960, I think an early payment benefit to me is more likely in the event I want to clear my loan early. Re: Would you 'fix' now? 17Mar 07, 2009 8:33 am Yes, that (the boldened bit) wasn't really what I meant to say - of course when interest rates are going down, the fixed rate at the start of the fixed term will be lower than the SVR but higher when they are going up. Sorry for any misunderstanding.
Hoffies, could you make extra repayments during the fixed term? Or would you not have been able to pay any extra anyway so this was irrelevant to you? Are you saying you fixed 80% of the loan so you could still make extra repayments on the 20% part? If you "won" on interest rate and the saveings outweighed the bank extras in terms of fees etc then sounds like it worked for you, well done I know I would not have been in front if I fixed - but then I have borrowed relatively low amounts and made use of the ability to pay extra payments and a couple of times used the redraw facility - eg. we once redrew $10,000 for a car. I am very glad I talked my son out of a fixed rate - ANZ suggested it when he bought his unit 12 months ago - he has been much better off with SVR, minimum fortnightly repayments have fallen from just over $414 to $323 in one year. He would of lost out big time if he took the bank's advice instead of mine Re: Would you 'fix' now? 18Mar 07, 2009 9:41 am Helyn Hoffies, could you make extra repayments during the fixed term? Or would you not have been able to pay any extra anyway so this was irrelevant to you? Are you saying you fixed 80% of the loan so you could still make extra repayments on the 20% part? If you "won" on interest rate and the saveings outweighed the bank extras in terms of fees etc then sounds like it worked for you, well done Yes, with my bank (and most others I think) I could make an additional 10k p.a. on the fixed rate portion. But I still leave some, 10% last time, and probably 20% this time on variable to allow for even more extra payments and the availability of redraw. Re: Would you 'fix' now? 19Mar 07, 2009 9:43 am Monique on ABC 774 today said "fix" as interest rates have never been this low in 40 years... "ECOECO" At 'EcoEco', we design windows, we design the best windows, we do it for you, so that when you’re happy we are happy. Tel. 1800 326 326 Re: Would you 'fix' now? 20Mar 07, 2009 12:37 pm so long as you are able to make extra payments on the fixed .... ’’Quondo Omni Flunkus Mortati ’’ If the women don't find you handsome, they should at least find you handy. Stila BK1 Build Thread The best place to talk about sport Bought in Nov 21 at the height of the market (classic). Good area, atrocious floor plan. BUT has land out to the left-hand side that we can extend out on (see second… 0 8773 Thanks mate. Yeah good points! Leaning towards Option 3 to get a bit extra space in the cabinets but not going too crazy high (and expensive). Would require a mini… 13 39703 Hi It came to my attention after the handover that - The facade cladding on the face and the side are not straight. -The face tapers down by 50mm from left to right and… 0 2461 |