Here is a media release I sent today. It may be of interest.
=====================================“Nine of the 25 lenders on our panel have increased their 2, 3, 4 and 5 year fixed interest rates over the past week. Considering the proportion of lenders that have increased their fixed rates, in my opinion, I would consider this to be a good indication that perhaps fixed rates are as low as they are going to get [for the lenders that have not already increase their rates]” says Stuart Wemyss, Managing Director of mortgage broking ProSolution. Lenders’ increasing their fixed interest rates can be seen as strong evidence that the lenders have adjusted their interest rate outlook. “If borrowers were to ever considering fixing their mortgage interest rate then now is probably the best time.” says Mr Wemyss.
Borrowers need to take into account other economic indicators such as the outcomes of the regular RBA Board meetings, local and international economic market commentary and other key economic indicators. The RBA will certainly take into account the strong consumer confidence figures released by the Westpac/Melbourne Institute index of consumer sentiment last week. This good news will be somewhat dampened by the comments made by US Federal Reserve chairman Mr Alan Greenspan that the continuing uncertainty over war with Iraq is weakening business investment and undermining a major pillar of US economic growth. “I would consider it unlikely that the RBA will increase the Cash Rate at its next meeting on 5 August, 2003 given recent indications that the local economy is still relatively strong” says Mr Wemyss.
The decision of fixed versus variable is always a perplexing one for borrowers. Borrowers need to consider the fact that history tells us that borrowers are on average worse off by fixing their interest rate. This fixed interest rate study was discussed in our recent press release (for copies of this release go to http://www.prosolution.com.au/ps_docs/prosolution_doc051503_151111.pdf). Borrowers also need to consider the other pros and cons of fixed interest rates (which are also discussed in the media release discussed above).
======================================That said investors need to consider that locking into a fixed rate may affect their ability to draw down on equity during the fixed period (without incurring break fees).
Cheers
Stu
Property & Finance News
at http://www.prosolution.com.auWow – how cool is it to make media releases! [8D] I hope they run with it for you Stuart.
Until recently, the way I looked at fixed and variable rates was this…
Variable rates simply reflect the current market, and fixed rates take into account the views and expectations of the market by all the experts (bank economists, foreign exchange dealers, etc…) based on all available data. Theoretically you should be in the same position either way (in the long term) – except you pay a premium for taking the no risk fixed option. You are buying a guarantee.
Its like saying the fixed rate = variable rate + a small ‘insurance’ margin. So if the fixed rate is less than the variable rate you should be thinking ‘good deal'[
]So I believed that variable is always better than fixed (even if fixed is cheaper, it is because all the available data suggests that variable rates will fall!).
BUT [
] – one of your newletters changed my thinking recently when it said that property investors should consider fixing the interest rates for a portion of their loans as a way to minimise interest rate risk (a major risk with a large property portfolio).I was wondering if anyone can suggest what overall % of loans should be fixed?
]
] – one of your newletters changed my thinking recently when it said that property investors should consider fixing the interest rates for a portion of their loans as a way to minimise interest rate risk (a major risk with a large property portfolio).The topic ‘Fixed Rates On The Rise – Is It Time To Fix?’ is closed to new replies.
