Fixed rates to rise

Hi all,

What are your thoughts on this article below?

Trump win means fixed rates to rise soon

Would you think it's a good time to start fixing your loans?

 

Have not read article, but have been watching rates drop over a long period, nobody knows for sure, but to me, the signals are being sent out that rates are at the bottom or close to it.

US will raise rates soon, but I think this is not really to do with inflation.

Our RBA I think has been signalling that they are not as likely to go for any more cuts, need to look at what drives fixed rate pricing.

 

I think that trying to beat the banks with fixing rate loans is a mugs game. Whenever I have done it I have ended up paying more in interest.

The landmark study by Mohesh Milevsky backs that up http://www.ifid.ca/pdf_workingpapers/WP2001A.pdf

If you need to fix the rates because you are stretched a bit and rises will hurt then it makes sense. Otherwise I think that you could be paying a premium because you take away risk.

A good broker might be able to swing you a cracker deal so always good to have a relationship.

 

Wait until the fixed rates start to move up before fixing. Don't pick the bottom, pick the first leg up after the bottom.

 

I'd rather be cashing out then locking in at ~3.9% for SANF rather than waiting and having to lock at 4.9%. Should Fixed Rates start sneaking up of course.

 

Excellent. Great choice.

My comment was geared towards those trying to time the market to get the cheapest rate. If you take a fixed rate after they start moving it's more likely you will be in the money compared to variable as it increases. Whereas fixing at the bottom you will spend some time out of the money, like those that picked the bottom 6 or 12 months ago. Or even 1 or 2 years ago....

 

Isn't it depending on what variable rate you get from the bank compare to fixed rate offering? Westpac seems to have attractive fixed rate compare with their SVR package even with discounting, as the level of discounting is a lot less now than before ......

 

Yes, fixed rates have been lower than variable for the last couple of years. Probably the last 5 years.

But as variable rates have dropped so have fixed rates. So if you had fixed 12 or 24 months ago, you would have got a great rate in comparison to that current variable. Now though, with that sharp fixed rate of 4.5 or 5%, you are out of the money.

Take a fixed rate as they start to move at 4.5%, initially may be higher than variable, but over the fixed rate term, i reckon you would be in the money as variable rates continue to move.

That's the theory anyway.

 

True.

Made sense for me though as the Variable was 4.79 or something ridiculous. So locking at 3.89 for 3 years was a no brainer. Just need to put the savings to good use whilst available. This was 2 weeks ago.

 

there was an interesting thread in ss 3 and 5 year fixed rates. It went on for some years. Interesting to see how rates, and members perceptions changed over time.

 

Agree was going to go 60/40 F/V split on a Westpac loan but their 5 year fixed seems too good to be bettered by a variable so now going with a much smaller variable portion.

 

Every time I think of fixing I remind myself of when I fixed at 8.5% for 5 years!

 

5 year fixed rates are lower than 4 year fixed. Is that a sign of something?

 

Same. 8.9% for 5 years. Mid 2000's. Then watched in horror as they dropped back to 5's. I don't see it getting much better than a mid to late 3% fix though?

Recently Fixed one for 3 years as that build started at a 90% LVR. Only just hit 80% a year later. End of the 3 year period there should be some more equity. Happy to have everything sit at sub 80% for Justin.

 

Nothing. It's pretty common. People tend to fix for 3 or 5 years so the difference might just be in popularity

 

I would have thought that it has to do with 5-year funding costs in credit markets. As to why the 5 year rate is that good - I don't (fully) understand the factors at play.

 

I'll be waiting for 2nd clear increase of rates before making a decision.
As per above trying to pick the bottom - no thanks.
Even if you pick the bottom doesn't mean you win, need to also consider the rate you come out on after fixed.
Delaying fixing means longer period on lower rate and hopefully missing a rise.
Perfect world would be getting a nice 5 year fixed, coupled with some inflation/CG and coming out when the rates are dropping again - not likely but would be nice.
I know a lot go caught worse case before GFC, rates increasing so they fixed ~9% only to see GFC/CL

 

When a loan is fixed, will it incur massive penalty to refinance?

What are the other cons for fixing a loan?

 

This is my first post. I signed up just so I could reply to you.

I've found the main 'con' associated with fixed rates is that you can't sell your property. Whilst you can sell, you face HUGE exit fees. I wish I knew this prior to fixing my rates, and no-one really told me (although I know it's my fault due diligence blah blah).

Whilst I had no intention of selling, the exit fees are huge and you may find yourself in a bind if you divorce/hit financial hardship/property boom and you want to cash in.

 

thanks Scott.

What is the percentage of the exit fee?