Fix rates 2.59% for two years - risk of rates dropping further?

Discussion in 'Loans & Mortgage Brokers' started by wylie, 2nd May, 2020.

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  1. wylie

    wylie Moderator Staff Member

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    I'm considering fixing our loans at 2.59% for two years (Westpac).

    These loans are all tied up with our townhouse build, which we will not be selling for several years, if at all.

    If we sell something else, we can dump up to $30k ($29k to be safe) into each loan without triggering a break fee.

    Our rates are up around 4.03% to 4.29% so we'd save a chunk of money for the next two years.

    I can fix a selection of loans, and keep some variable, to give more flexibility.

    My only concern is if rates drop. Anyone have a crystal ball?
     
    Last edited: 2nd May, 2020
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  2. Biggbird

    Biggbird Well-Known Member

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  3. Owlet

    Owlet Well-Known Member

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    I don’t know if they will go down further but I am happy with 2.59 rate. It is better than 4% and with no plans to sell nor pay these down it seems like a good option.
     
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  4. skater

    skater Well-Known Member

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    Sounds like a good idea to me.
     
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  5. Skinman

    Skinman Well-Known Member

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    I applied to break and do the same with all my Westpac loans last week.

    Downside is I was advised it may take upto a month to process but:

    1. Break costs quoted and calculated on day i decide to go ahead apply and
    2. If rate changes in between now and the possible 1 month to get the paperwork out to me signed, returned and processed it tough luck!
     
  6. wylie

    wylie Moderator Staff Member

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    Thanks @Skinman - I won't be breaking as our loans are currently variable. I have locked rates and prepaid interest many times before (and never without something going wrong, but that's another story for another time).

    This time I will not be prepaying, so that 30th June, 5pm deadline that I've had so much fun with in past years won't be a problem this year. What could possibly go wrong? :D:p

    I know they need to issue documentation and that takes time, but I doubt rates will rise while that happens.

    My broker is seeing if they will reduce our rates without locking, but I doubt this is going to happen.
     
  7. # 1

    # 1 Well-Known Member

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    I'm in a similar situation with CBA currently charging me 4.28% variable P&I or I can fix with them for 2 or 3 years at 2.84% P&I. These are investment rates. I think I will fix for 2 years as I don't think fixed rates will drop much more. Even if the RBA goes to 0% I don't think the banks will pass it all on.
     
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  8. Owlet

    Owlet Well-Known Member

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    If you are on the wealth package you can get 2.69 inv Pi fixed 1-3 years
     
  9. Owlet

    Owlet Well-Known Member

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    Thanks for the info - I’m looking to break and re-fix. 1 month is ridiculous. I couldn’t get through to them on Friday and didn’t get a call back via their website either.
     
  10. Skinman

    Skinman Well-Known Member

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    I was ringing for a week. Ended up registering for the call back which took 4 business days but they did call in the end. The guy was actually very informed and helpful.

    The 1 month thing is a real issue for me. I calculated the benefit of reduced rate for renaming term of loans v breakcosts assuming a 1 week period to get on new rate. Waiting 1 month makes it marginal with the only real benefit being the break costs are tax deductible
     
  11. sandyfeet

    sandyfeet Well-Known Member

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    Predicting the future is a bit of a guessing game. We fixed a large chunk of PPR debt 12 months ago at 3.69%, variable portion has come down to about 3.2%. Sure it would be better to have it all variable but we locked in a portion at that time for that certainty - not ideal now, but we've still got what we planned for. Lucky our employment in this environment is consistent.
     
  12. Skinman

    Skinman Well-Known Member

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    Good point...the only reason I have just broke and refixed is because I thought 4.1% IO fixed was a great rate 12 months ago when I was paying 4.79 variable.
     
  13. # 1

    # 1 Well-Known Member

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    I thought wealth package gave you a .07% discount, not .15% ? My CBA loan is only 50k so it's still not worth paying $395pa to get a $75pa discount (50,000*.15%)
     
  14. ChrisP73

    ChrisP73 Well-Known Member

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    We've just fixed a couple of investment loan splits with CBA. Rate is so much better than variable and we have a need to be with CBA for this particular security.
    Decided to just go 1year fixed though to hedge our bet. Not always just about the lowest rate though..
     
  15. Yson

    Yson Well-Known Member

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    I just locked it 3 yr fixed pi with Anz at 2.49% as happy about it
     
  16. Owlet

    Owlet Well-Known Member

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    I think the discount applies to variable.
    The $395 serves me well for multiple loans and splits and Ive always had good rates.
     
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  17. Skinman

    Skinman Well-Known Member

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    Don’t forget the package fee is also generally tex deductible.
     
  18. euro73

    euro73 Well-Known Member Business Member

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    AMP today

    Screenshot 2020-05-27 15.26.25.png
     
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  19. mikey7

    mikey7 Well-Known Member

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    Damn those are some good rates. I can't wait until we're in a position to be able to go P&I on investments. Should start seeing the snowball grow then!
     
  20. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    Whats the variable rate that is 50% of the deal ?