Would you take a fixed rate of 2.29% on PPOR

What’s the pros and cons of taking a 1 year 2.29% fixed rate vs 2 years 2.19% fixed rate for a PPOR? We are initially thinking of taking a 1 yr fixed rate but wanted to check here what are we missing if we are not going to take the 2 yr fixed rate? We are aiming to get our first IP in the next 8-12 months.

 

In 1 year, do you think the rates will be higher or lower than 2.19%?

 

Or if it changes, will it be materially different? i.e. is it worth refinancing to?

 

I don’t think it will be lower. RBA has lowered the rates but banks didn’t lower their rates. But I reckon the PPOR valuation might be lower in a year due to covid19.

So should we fix then for 2 yrs?

 

I’m guessing not much difference in the rates in a year.

 

Silly question but why does valuation matter after a year? Is this if reval is less than 80% of mortgage amount?

 

That was what I was thinking.

 

No, you don't need a valuation just to switch to a fixed rate, only if refinancing/releasing equity.