Interest Rates fixed or varible?

Viewing 8 posts - 1 through 8 (of 8 total)

TS_2
Participant
@ts_2
Join Date: 2003
Post Count: 0
December 2, 2003 - 8:39 am
Hi All Property Investors. I am after some opions etc.
Prior to recent interest rate rises,what rate have people been able to lock in fixed rates at, let’s say 3yr and 5yr terms? Since interest rate rises, what are the rates now for the same terms?
Also are people locking all their loans or just a
pecentage of the loan?
Some of the profesional packages offer, say .7% discount off the std varible rate for the life of the loan. If you lock in a fixed rate you loose this benefit on that portion of the loan you fix.What are your thoughts,and is it wise to do so? [8]
kkowalsk
Member
@kkowalsk
Join Date: 2003
Post Count: 48
December 2, 2003 - 9:19 am
Everything I’ve read suggests the time for fixing has gone. With so much speculation over rate rises and the strentgh of the economy, the banks have adjusted fixed rates accordingly.
I wouldn’t worry. With the massive growth in property values, average mortages are quite high, and v. high rates (ie. over 10%) would have the potential to drive many to the poorhouse. If you can handle up to 10%, go the variable.
westan
Member
@westan
Join Date: 2002
Post Count: 1,950
December 2, 2003 - 9:48 am
hi guys
i’ve locked in about 50% of my debt for 6.69% for 5 yrs and 6.19% for 3 yrs.
i don’t expect rates to rise much but better to be safe (as i owe a lot), my variable rate is still under 6%.
if i didn’t owe very much then i’d probably go with a variable under 6% rather than fixed rates over 7%
regards westan
Shirley_2
Member
@shirley_2
Join Date: 2003
Post Count: 87
December 3, 2003 - 4:03 am
We locked in fixed rates on different properties earlier this year with the National as under:
5 yrs at 6.56%
3 yrs at 6%
2 yrs at 5.9%
Sooshie
Member
@sooshie
Join Date: 2002
Post Count: 974
December 3, 2003 - 4:08 am
Hi there,
I think what Westan has done is a great idea. To partially fix your loan is a good option for many now (those who’ve negatively geared their properties are probably rushing to do this already). I have a partially fixed loan (Fixed Rate), of which the standard variable rate (SVR or floating rate) is higher, so if we wanted to get out of the fixed loan, there would be no break costs.
EG SVR = 7% FR = 6.5% So the banks would only make more money if you asked to break your fixed term, so they shouldn’t charge you any break costs.
Cheers
Soosh []
When a problem is created the solution is created simultaneously
Still in School
Member
@still-in-school
Join Date: 2003
Post Count: 1,844
December 3, 2003 - 5:08 am
Another option that is available is, if you have time on your side (i mean, if you can sacrifice a few years)
Eg. $100,000 at 6% over 30 years = S149.96 pw
After 2 years you have payed your loan down to $90,000 but interest rates are rising and you are now paying weekly repayments at 7% at roughly $166.28 per a week.
If you have the time on your side and you dont mind the scarfice, go ahead and re-extend your loan back to an affordable amount.
eg. $90,000 over 30 years at 7% = $149.66 pw
once the market interest rates come back low again, re-structure, re-organise or refinance or what ever you want to do and bring the loan back to an affordable amount, were your repayments are near or back to your orginal mortgage loan(from the begining.)
This way if you are worried about interest rates, but know what you are doing, or know how to take control, you can still be paying your mortgage loans off nicely at your affordablilty rate that suits you best.
cheers
s.i.s
hoped i explained that well enough.
Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
Still in School
Member
@still-in-school
Join Date: 2003
Post Count: 1,844
December 3, 2003 - 5:30 am
oh before i forget, dont rush out and do this idea, if you are thinkin about it. Talk to your lender first and make sure they do allow for re-extending your mortgage loans, and also some lenders may charge a fee for re-extending your loan, but make sure that you do correct your loan when interest rates are low and your affordablitiy is right and suited for you, or else you be paying alot of interest,
use this as a temporay way of handling huge amounts of interest or debt that is getting a little out of hand.
cheers
s.i.s
Save on a regular basis
“People forget that by saving just $3 per day and investing it sensibly over a working life, you’ll end up with around $1 million.”
TheFinanceMan
Member
@thefinanceman
Join Date: 2003
Post Count: 18
December 3, 2003 - 8:39 am
I reckon if you can afford fluctuations in interest rates and your not absolutely 100% sure you’re going to stick to your loan and lender for the fixed rate term, then go variable.
Nothing worse than being stuck with an inflexible fixed rate loan that costs you heaps if you want to change anything. I had a mate who sold his property 2 years into a 5 year fixed loan and paid $22K in break fees! Worth paying an extra $50 a month in extra interest if rates go up I’d say…that way you always have options with your gearing!