Anyone notice when St George’s 5 yr fixed rate dropped from 4.99 down to 4.49? I only just noticed this.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
We signed up for our 2nd IP to a 4.79% 3 year fixed for $665k in October last year on a portfolio loan which I noticed if we signed today is now down to 4.64% but a 5 year fixed down to 4.64% is great.
St George obviously believe standard variables are going to drop lower than the 4.74% they are currently charging for variable portfolio loans (at least that’s what our other variable rate mortgage currently is at as have $900k in total mortgage).
With the potential for another 0.25% happening on either March 3rd or April 3rd from the RBA dropping the variable portfolio loan to 4.49% means you will be paying a premium of 0.15% to lock in a rate for the next 5 years……..unless anyone has any other feedback sounds like a good deal to me.
We’re planning to purchase our 3rd IP in June so hopefully can lock in a 5 year at that rate.
Dean,
Well done so far and best of luck on the next one!
I ended up fixing 2 loans for 5 at 4.49, as you said a premium of .15 with current outlook in my mind pretty good as I can’t see things being in the doldrums for 5 whole yrs. time will tell of courseWe signed up for our 2nd IP to a 4.79% 3 year fixed for $665k in October last year on a portfolio loan which I noticed if we signed today is now down to 4.64% but a 5 year fixed down to 4.64% is great.
St George obviously believe standard variables are going to drop lower than the 4.74% they are currently charging for variable portfolio loans (at least that’s what our other variable rate mortgage currently is at as have $900k in total mortgage).
With the potential for another 0.25% happening on either March 3rd or April 3rd from the RBA dropping the variable portfolio loan to 4.49% means you will be paying a premium of 0.15% to lock in a rate for the next 5 years……..unless anyone has any other feedback sounds like a good deal to me.
We’re planning to purchase our 3rd IP in June so hopefully can lock in a 5 year at that rate.
BuyersAgent | Precium
http://www.precium.com.au
Email Me | Phone MeSouth Coast NSW Independent Buyers Agent - Wollongong to Batemans Bay and Regional NSW. DOWNLOAD OUR FREE 14 POINT PROPERTY BUYER'S CHEATSHEET to avoid painful mistakes at precium.com.au
Fundamentally locking in rates isn’t about gambling on the variable vs. fixed pricing – but the long term certainty in your interest costs. The 5yr fixed is certainly cost effective at this time, and if you’re happy with the long lock in period (double edged sword) then it can be a prudent measure.
I’ve certainly noticed a *large* pick up in clients interested in taking up the 5 year rates on offer with lenders across the board at the moment.
Corey Batt | Precision Funding
http://www.precisionfunding.com.au
Email Me | Phone MeInvestment Focused Finance Strategist - servicing Australia-wide
Fundamentally locking in rates isn’t about gambling on the variable vs. fixed pricing – but the long term certainty in your interest costs
Agree Corey. It’s about looking at your portfolio and running some “what if” and “how much” scenarios.
My only concern with the 5 year period is that it’s difficult to plan ahead that far. Life is a little bit more predictable when planning for 2 or 3 years from now….and if you have to break a 5 year fixed loan it could be quite expensive.
Having said that – I’ve noticed the same as Corey in recent times, a sharp increase in clients wanting to take out 5 year fixed rates.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi Jamie,
For me personally its a “premium” that enables me to sleep at night, there is no way ANYONE should be buying and selling within 5 years. the entry/exit costs are just too high, go buy equities instead.
Agree Dean – the unfortunate reality is that some are forced to do so…..which is something that isn’t often foreseen.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
http://www.passgo.com.au
Email Me | Phone MeMortgage Broker assisting clients Australia wide Email: [email protected]
Hi all,
and if you have to break a 5 year fixed loan it could be quite expensive.
Just one thing I would suggest is that EVERYBODY who is looking to take on a Fixed Loan (especially 5 years) should KNOW the magnitude of any Break Costs. With IR’s as low as they are, it does appear that a lift in 5 years COULD be on the cards.
So, have a talk with your lender or Broker about “What if I had to Break after 4 years and a. the Variable Rates were still 1% below my Fixed Rate and b. If the Variable Rates had climbed to 1% ABOVE my Fixed Rates.
As a hint – if you BREAK a Fixed Loan and the reigning VARIABLE Rate is LOWER, be prepared to take out a mortgage to pay the Break Cost. How big a Mortgage will depend on the amount you have on the Fixed Loan, and the delta between the Variable and the Fixed Rate
If nothing else, simple BE AWARE just how crippling it could be if things went sour with a Fixed Loan.
DON’T contemplate putting any property on Fixed if you are planning to SELL it – unless you like giving your cash to the Bank….
Caveat Emptor with Fixed Rates !!
Benny
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