Few small banks increased their interest rates today more to follow, what you guys going to do?
Home Loan Interest Rate Rise on The Way
777 on 22/11/2016 - 18:27
Last edited 24/11/2016 - 23:11 by 1 other user
Last edited 24/11/2016 - 23:11 by 1 other user
Poll Options
- 29Leave it unchanged
- 0Fix it for < 1 year
- 1Fix it for 2-3 years
- 5Fix it for 5 years
- 1Variable
Comments
In my case 1% is bearable ~20k/year
But still it is loss in profits or rent increase
Anything more than 1% becomes tricky for most investors or home owners
Doesn't seem like a big margin for error!
I guess there is safety in numbers and if there are so many vulnerable to small rate rises, then only minor increases will be necessary.
Remember we have 7% rates in the last 10 years, so it isn't purely speculative.
Maybe fix half?Agreed
Yeah that's what I am thinking lock in couple of loans
Half and half in single mortgage .. not a big fan of them as when comes to selling you pay two set of discharge of mortgage and everything that goes with them
@777: Half fixed and half variable is a good idea but remember banks are not stupid. If they think that opportunity cost is increasing for them, they will increased interest rate for fixed as well.
Depending on where your property is located, a rent increase might not be feasible such as QLD CBD apartments.
Also bear in mind if you need to sell due to pressure from rising interest rates, others will be too, which moderates the capital gains. But capital gains are good; however, don't forget to set aside funds to cover CGT.
Agree, a lot of people have overextended themselves over the last few years due to the historically low interest rates, and anything more than 1% will be a challenge for these buyers.
Greater bank increased their interest rate from 3.74 to 4.09% fixed 5 years
I believe more to come overnightIs that your only example - which other banks?
Nope couple other small banks
Say goodbye cruel world.
Kidding.
I factored in that even in the unlikely chance that interest rates go as high 10% i may find it tough but will still be able to make repayments.
The trick for me was to borrow what i could afford to pay back even with a much higher interest rate than when i first got the loan. I was already factoring this in the equation.
The trick for me was to borrow what i could afford to pay back even with a much higher interest rate than when i first got the loan.
I believe it's more about your affordability than 'trick'. You can afford 10% interest rate, many other property owners can't afford 6%.
@ 10 % we would be looking at high rate of defaults
APRA might push RBA then to bring it down
For now highly unlikelyPeople are afraid of 5%, leave aside what will happen at 10%. Let's see the realistic situation.
@virhlpool: I think it will be staggered
But RBA indicated already rate cuts are not helping inflation so imo no more rate cuts for now
Granted poor choice of words. Basically i checked what the repayments where if interest rates went up. Which was always a possibility.
I wanted to see up to how high could the interest rates could get up to before i couldn't make the repayments. Turns out 10% was going to start making it hard to make repayments.
To sum up. If cannot make repayments if interest rates go up by 1% then its very likely you went too far and over borrowed.
Not expecting everyone to factor in a 10% interest rate but surely thinking 3% to 4% increase as a possibility at least.
Agreed 3-4% hike more likely but that would be enough to cause the shift in people mindsets and find another way of investments
I've had fixed repayments on variable interest, at the moment I'm adding $100+ extra a month, I can handle a 1% increase quite easy, even 2-3% I can maintain without sacrificing anything, don't want to though!
Is 'fixed repayments on variable interest' different from 'fixed interest for some time and variable later'? If so, how does bank recover the missed interest (beyond what was fixed and paid by you) in that case? Won't you need to pay it after some loan tenure anyway for bank to recover the missed interest amount?
i just chose to pay a flat amount a month, and when interest rates go down, i contribute a little bit more without changing anything, i know I've knocked off nearly year off my loan already in 3 years
Understood. But what happens when int rate goes up? How/when does bank recover the increase from you?
I'll worry about it if and when I have to. I will be ahead enough not to worry for quite a few years
@berger: have a look at few fixed interest rates atm, ING has fix owner occupied at 3:59% which still is much better than other variables in the market even there are further rate cuts
I am sure other small finiancial institutions can do better than ING@777:
That's pretty good, I should pay more attention to Isla Fisher then!
The only downside is I can't change banks at the moment, we make payments and well ahead, but wife is on maternity leave so no payslips produced, so no one wants a single income family.
Double post
Just relax
most bank are raising their interest rate, nearly by .5%
How sensitive are you to a rate rise?
If rates went up 1%, would it be a problem for you to make the payment?