Is now the time to fix?
With rates at 2.19% I'm curious how many of you have chosen to fix.
Is Your Home Loan Fixed or Variable?
LemonShapedRock on 11/05/2020 - 23:13
Last edited 12/05/2020 - 05:19 by 1 other user
Last edited 12/05/2020 - 05:19 by 1 other user
Poll Options
- 59Variable
- 13Fixed
- 15Half half
Comments
Good call on the half half, can't seem to edit the poll though
Poll options fixed.
Broker here.
No advice, just a few pointers.
1/ Some lenders allow 100% offset against fixed loans, fixed loan being lower than big 4 rates.
2/ Don't fix 100% of the loan if you can 'overpay' by more than $10k p.a. as most lenders will penalise you
3/ If you are still undecided, just 'split' the loan and have a portion of each.
half half so you can pay extra over 10k pa
80:20
i like
69:69
I went with both. I have fixed interest for 2 years on the majority of the loan and variable for an amount I think I can pay back extra over the 2 years. I'll do this again when the fixed term ends.
Viable - you only fix if you think there is a good chance interest rates could rise which isnt going to happen though i do agree 2.19% is good these usually have a high comp rate due to fees (happy to be corrected)
I wouldn't be surprised if within the next 18 months we are at negative cash rate…
The comparison rate is looking really high not because of the many fees associated with fixed loans.
The comparison rate is based off a $150,000 loan. Who has a tiny loan like this anyways. So if you have a $150k loan, an annual fee of $400 is going to seem huge and that's why you get a big percentage. And when the interest rate itself is so low, it looks like a huge difference.
In a loan of let's say $500k, the $400 will be 0.08%. and the $400 in $150k is an extra 0.2%. An extra 0.2% now just look a lot bigger than it ever has being compared with 2.19%
This is true but you lose all benefits of an offset/redraw in a fix loan you also cant refinance or end the loan without big fees (>4k from what I've read in some PDS)
Also, you are looking short term if interest rates go to Zero or negative the variable rate could easily drop below whatever fixed rate you got now.
Losing the ability to refinance takes all the power away form the consumer - sure i dont have a crystal ball it is possible interests could go up but in the curret financial climate i doubt a raise will be on the cards and it is highly likely a drop will happen in the next 12months
But everyone is different and if fixed work for you then power too you but person who did a 5 year fix 3 years ago are all paying over 5% now on top of pointless annual fees
I wasn't arguing for fixed over variable. I was just saying that comparison rates are silly and not necessarily that fixed loans have more fees.
Also the comparison rate for fixed is generally higher because after the fixed rate it reverts to a higher variable which by then, ozbargainers would have renegotiated by.if interest rates go to Zero or negative the variable rate could easily drop below whatever fixed rate you got now.
not a chance
current RBA cash rate is 0.25
current lowest variable is 2.59 ?
@dcep: I mean interest rates can hit zero or negative loan variable rates could go as low 1.5%
The RBA cash rate and interest rates are not inversely proportional
loan variable rates could go as low 1.5%
for that to happen from here, RBA cash rate has to be -0.75 , AND provided the banks willing to pass on every RBA rate cuts
RBA cash rate and interest rates are not inversely proportional
are you saying banks will be so kind to cut 1% , regardless of RBA cutting or not ?
the banks don't even pass on the last rate cuts when RBA further reduced 25 basis point in mid-March
do you even follow the rate cut trends by banks ? they only cut when RBA cut , and that's not even every time.
@dcep: I think you miss understood i mean if the RBA cut interest rates then having a fixed loan could cost you more…
'Banks' may or may not pass on the cut but that is up to consumers to change constantly to get a better deal to keep pressure on prices to keep them competitive many years
Not reviewing your home loan annually is what i all a laziness tax in which there are people still paying interest over 5% because they havent done anything about there loan for
Currently variable with Tic Toc, I know I can get a cheaper rate elsewhere. I'm tempted to fix at 2.22% with Tic Toc for 3 years but unsure if that's a good idea or not so thanks for starting this thread.
Thinking about carving off 70% to be fixed for 3 years @ 2.24%. Cannot see rates dropping further, given RBA is at 0.25% already, and have stated they dont intend to go lower and will take on other efforts to encourage spending.
2 years fixed under 80% LVR with 500k+ loan
* ING 2.09
* ANZ 2.19 $395 annual fee
* St George 2.24 $395 annual fee
* Adelaide Bank 2.29 $15 per month for offset
* Bankfirst 2.29 $390 annual fee
* Advantedge (same funder as ubank) 2.29
* CBA 2.29 $395 annual fee
* NAB 2.29 $395 annual fee
* Suncorp 2.29 $375 annual fee
* Virgin Money 2.29 $10 per month
* Westpac 2.29 $395 annual feeVariable as the rba was cutting their rates in the past few months. Considering fixed
Seems a good time to go fixed given that the fixed rates being offered are lower than the variables on offer.. I guess the banks are betting on very little change in the next couple of years, or only slight downward shifts..
I'm no expert, but its odd to see the fixed rates substantially lower than the variables.
I'm guessing that they think the rates will go lower so that is why they are trying to get people into fixed rates. They wouldn't offer really low fixed rates for three years if they think rates are going to go up.
I agree. But I think their agenda is more based on offering a promo fixed rate for 2~3 years to lock a customer in with them for that period, rather than bag extra dollars because of further rate drops. I think that any further rate drops will be minimal at best..
Not so sure about that as when fixed rates were higher than variable rates Banks were aware that there would be heaps of room to further cut rates.
I read somewhere the reason why the fixed interest rates are low is because it's being subsidised by government bonds which was introduced due to this virus.
Plus the last time interest rates fell, the banks chose other means to cut rates and provide other services for customers in strife rather than cut the overall rates for everyone.
As mentioned, rates are also very low so things will have to be in the gutter for them to cut to 0 or go negative. It was left on hold this month so we could already have hit rock bottom unless there's a 2nd wave.
This is why I feel the variable rates will unlikely reach these fixed rates so it'll come down to personal preference and if you will want to give up flexibility for the saving you will get.
I honestly dont think anyone can predict what is going to happen with any promise. Ive been contemplating fixing our loan for the past week and have spoken to several brokers, who lets face it, are pretty keen to get people signed up so they get paid by the bank. The market would be ripe for the picking with people worried about their current financial positions and possible futures.
My personal view is that I wouldn't expect rates to drop so far from where they are now that you will see dramatic savings on a 3 year fixed term. This could be totally wrong but its part of the decision making process we agreed on so we could move past the trap of procrastination due to uncertainty. We personally will most probably opt for a split rate where by we can still use the effective tool to offsetting what we believe we can bank over the fixed term so that our savings will work for us in a better capacity rather than sitting idle in another account. For us, fixing the rest of the loan gives us the ability to predict what our position will be in 3 years. We dont intend to to pay the loan off during this time, we are not looking to refinance once locked in, we have looked at the comparison rates and will also make sure the rate revert at the end of the fixed period is not astronomical. So the loss of 'flexibility' on moving from a variable rate for us is not an issue.
The best thing we did was make a budget and agreed on what we were comfortable/ could pay for our mortgage. We were already happy to commit to our current variable rate when we signed up so to find more savings in a slightly lower split rate will only be a bonus for us added with knowing for sure what we have to spend on servicing our loan which for us is be the biggest cost to our household. Everyone is going to be different so it was good for us to sit down and flesh out what we needed from our loan and not become so fixated with predicting what the rate roulette wheel is going to do.
Fixed for 3 years last week. I am with big4 and the difference between variable and fixed is huge. Pure gamble
I fixed for 1 year with ANZ because it comes with an offset account and the rate is 2.39%. I considered splitting the loan and fixing portion for 2 year at 2.19% then calculated the difference with splitting the loan and this was actually better for me- more flexibility with a shorter fix and about the same moneys.
Fixed with an offset account? Is it a 100% offset?
yes only ANZ has it and only on the 1 year fixed term
That is great. I will give my broker a call tomorrow
Not true, many lenders do 100% offset against fixed loans from 1-5 years.
please fix, pool options:
variable
fixed
half half
i dont care, the % is low anyway