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Fixed rates dropping???

Discussion in 'Property Finance' started by HomeMinister, 9th Nov, 2015.

  1. HomeMinister

    HomeMinister Well-Known Member

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    hi all

    last month i thought of fixing my loan with suncorp for 4.74 for 1 or 2 yrs and was hindered due to pending RBA Xmas

    gift as rates drop i guess. now the Xmas is not here yet and suncorp has dropped rates to 4.44 for 2 yrs! 0.3 drop staggered my mind.

    do you guys think i should hold until Xmas comes by? am i stretching way too much on generosity or it cant be better than this ?
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    CBA have reduced PPOR fixed across a wide range by 10 pts today........

    ta
    rolf
     
  3. Redom

    Redom Mortgage Broker Business Member

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    2 year fixed rate with ME is at 3.89%. Its a very sharp rate.
     
  4. HomeMinister

    HomeMinister Well-Known Member

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    Why are the banks doing this when RBA keeps its rates on hold.? firstly they increase without RBA increasing end they decreasew without RBA
    decreasing?
     
  5. Waterboy

    Waterboy Well-Known Member

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    Because the banks don't get their funding from the RBA. And because fixed rates are a different animal to variable rates.

    Their cost of funds is determined by the market conditions, not the RBA.

    Remember in 2014. The RBA did nothing. But the banks have been cutting rates to new customers to take advantage of low funding costs and stary competitive.
     
    Last edited: 9th Nov, 2015
  6. Waterboy

    Waterboy Well-Known Member

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    US employment numbers released on Friday are whopping.

    Expect US rate hike soon.

    That will have a major impact on Australian cost of funds. Aussie banks have significant dependence on international capital markets.

    This is a good time to lock in good fixed rates. Because AU swap rates have gone up this morning in response to US developments.
     
  7. Redom

    Redom Mortgage Broker Business Member

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    The fixed rate funding market isn't as closely tied to the RBA cash rate. Variable rate home loans are much more closely aligned with the RBA.

    Fixed rate market is tied to international funding market movements. Nonetheless, the RBA cash rate does have an impact as it does adjust one end of the yield curve lower. The longer you fix for, the less of an impact the RBA cash rate should have (theoretically).

    As Waterboy suggested just then (look at global credit market factors to determine pricing changes if you want to predict future of fixed rates)
     
  8. HomeMinister

    HomeMinister Well-Known Member

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    Thanks guys!! can you also suggest if any more cuts to fixed rates are expected in near future?
     
  9. Waterboy

    Waterboy Well-Known Member

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    In my opinion, nope. US rates are going up next month (for the first time in almost a decade), and it will suck away capital from other markets. We all know what that means for Aussie rates.

    Unless a black swan event happens again.
     
  10. apk

    apk Well-Known Member

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  11. Wall Street

    Wall Street Well-Known Member

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    I just fixed some loans with ANZ this morning.

    The quote 3 years fixed IO was 4.69 on Friday. This morning, fixed on same terms for 4.54.

    For once, my procrastination paid off!