Just a quick question as to what everyone is doing nowadays for new loans, ( Or restructuring existing loans ).
Is Fixed the way to go or stick with variable for the time being. I know it can have a lot to do with the loan amount, situation etc, but just keen to know other peoples opinions and situations.
CheersI personally prefer fixed rates because they lock you into a good rate right now. Although rates may drop I could not control if the rates skyrocket. It also helps that I get to plan my strategy better with a fixed rate plan.
Sometimes you can have both by splitting the loan you would do this if you had an intention of making more repayment than was needed as the variable portion would allow extra repayments where as the fixed portion would have restrictions on repayment.
So if you thought you may pay off 15% of your loan over the fixed period through extra repayments you would fix 85% and have 15% variable.Sometimes you can have both by splitting the loan you would do this if you had an intention of making more repayment than was needed as the variable portion would allow extra repayments where as the fixed portion would have restrictions on repayment.
So if you thought you may pay off 15% of your loan over the fixed period through extra repayments you would fix 85% and have 15% variable.Good question.
FYi, I have not processed/sold/ set up a fixed rate home loan in the last 6 mths – whether it be new to bank customers, exisitng cutomers, or for brokers/introducers that refer business. I did think it was amusing a few months back when fixed rates were in the mid to low 5's %, and all the 'ex-spurts' were going to fix their loan as soon as the rates got lower……….That would have been the time to do it – but very few did. Byt the time a lot of people realised they were not going to get any lower, fixed rates were already 100 + points higher (and more now of course) than a discounted variable rate loan!
Until rates get back up around the 8% I think it will stay a varaible rate market – and if you think about it youll work out why.Cheers
I would probably think it isnt the best decision to fix right now.
Most people are getting scared of the rate rises, and majority will now look at fixing….the banks of course, are always two steps ahead…and will adjust fixed rates according to the market trends….So, in saying that….if most people will now start fixing, what do you think the banks will do with their fixed rates? Mark up…big time!
I'd say stick out with variable for next 6-12 months, test the waters…. and maybe look at fixing later on when this rogue rate increasing stops from RBA.
This chart is updated daily i believe.
http://www.asx.com.au/data/trt/ib_expectation_curve_graph.pdfThe only way to look at fixed rates is to monitor wholesale rates.
We knew a few investors who got the 5 year fixed at it lowest point…..Its now not really that cost efficient to fix as the averages are far too high above the
floating rates. HOWEVER it is still risk management to fix if you "think" its going to go
up more substantially…..Sorry-forgot to say, bookmark the link if you like,
We watched it as the rates were coming down and it was very close in the predictions…
The fixed wholesale rates are generally the cost of the banks funding and they forecast what they think the rates are going to do.
If fixed is heading up, the floating will follow. With the fixed rates all heading up, the floating will probably follow in a short time.
Which is shown in the asx chart above….. Pretty simple(tongue in cheek)
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