Time to fix PPOR loan?

Discussion in 'Loans & Mortgage Brokers' started by spludgey, 30th Oct, 2019.

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  1. spludgey

    spludgey Well-Known Member

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    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.
     
  2. Hetty

    Hetty Well-Known Member

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    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.
     
    spludgey likes this.
  3. Jamie Moore

    Jamie Moore MORTGAGE BROKER - AUSTRALIA WIDE Business Member

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    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
     
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  4. spludgey

    spludgey Well-Known Member

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

    Hetty Well-Known Member

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    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.
     
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  6. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    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
     
  7. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

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    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.
     
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  8. Gen-Y

    Gen-Y Well-Known Member

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    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. ;)
     
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  9. Phar Lap

    Phar Lap Well-Known Member

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

    spludgey Well-Known Member

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    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.
     
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  11. Hetty

    Hetty Well-Known Member

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

    spludgey Well-Known Member

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

    Morgs Well-Known Member Business Member

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    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!
     
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  14. spludgey

    spludgey Well-Known Member

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    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.
     
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  15. TSK

    TSK Well-Known Member

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    Did you avoid the establishment fee?
     
  16. spludgey

    spludgey Well-Known Member

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

    Redwing Well-Known Member

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    Moving up

    3 months

    upload_2021-2-20_9-26-7.png

    1 year

    upload_2021-2-20_9-25-16.png
     
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  18. Tony Xia

    Tony Xia Structured Loan Advisor Business Member

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    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?
     
  19. Gen-Y

    Gen-Y Well-Known Member

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  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    Bring it on.

    In the GFC we had lots of clients that geared up and bought CBA at 28 bucks.

    Have lots of folks sitting on the sidelines waiting for an entry point, doesnt need to be GFC like though.

    ta
    rolf
     
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