Time to fix PPOR loan?

I've got a PPOR currently on 3.42% (0.15% cut coming in two days), but my bank is offering a 2.88% 2 year fixed loan, which is still at least two additional rate cuts.
Would you pull the trigger? I'm definitely not moving in the next two years.

 

Who is the bank? If it’s TM Bank the risk of fixing is small. We had to pay out a fix that had ages left, can’t remember how long but it was about $480k and at least a year left, I think probably two, and it was only a few hundred dollars.

Westpac on the other hand was $5k despite only 7 months left. Buggers.

 

It's a tough one.

I wouldn't fix the entire loan - just a portion. Keep some variable so you can still have some flexibility (ability to offset, redraw, make unlimited extra repayments).

Cheers

Jamie

 

Yes, it's TM Bank, who offer an offset facility for fixed loans as well, which makes it even more appealing.

 

Yeah I’d probably do it then, only because it’s TM Bank. It’s a good rate and you can probably break it quite cheaply if you need to. I mean rates could go down again soon and their fixed rate would drop again so it’s a gamble, but fixing always is, at least it’s less of a gamble with TM.

 

My crystall ball doesn't see rates increasing, but what if fixed rates drop more? You could wait a bit and might be able to lock in at a lower rate

 

I can't see rates going up either for quite a while. Overall I don't think you'd be disappointed if you fix, other than there might be a better opportunity in the future. I'm adopting a 'wait and see' approach.

 

If Australia 10 years bond yield is so low 1.16% and pointing down. You can safely say it will remain low for 10 years.

 

fix 1/2 loan now and the other 1/2 if rates drop again.

 

Thanks all. I went ahead with it. To me it seemed that the opportunity cost of sitting and waiting was higher than potential losses of rates falling further.
Cheers.

 

If they do fall check and see how much the break costs are, may only be a few hundred.

 

Bugger! I should have listened to all you nay sayers!
TMBank dropped their rate by 0.62%!

 

Why take the stairs when the elevator is already going down?

Not to worry.... you've got an offset account there you can fill up to mitigate any impact!

 

Yes, if you get too hung up on "if onlys", you'll never be happy! Very unfortunate timing, but my new rate is still nearly 2% lower than it first was when I bought my PPOR 6 years ago.

 

Did you avoid the establishment fee?

 

Had to pay $240 in fees. Wasn't a new loan, just switching it.

 

Moving up

3 months



1 year

 

3.42% ? That's substantially higher then any other investment rates P&I out there, let alone a PPoR.

Why not choose Adelaide bank 2.05% fixed with 100% offset?

 

Sounds like a stock market wobble is coming. That is what that is saying to me.