Refinancing,should i go for a fixed rate or a variable rate?

dave289 · 19-01-2008, 10:34 AM

I was wanting to refinance a mortgage that i have and was thinking of getting a fixed rate loan to counter any interest rate rises.Then last night on the telly Aussie home loans John Symonds is saying he would'nt go for a fixed rate as they are to high at the moment and that he thinks interest rates will decrease before to long.What do you guys recommend and if you know of any good rates or deals any help would be much appreciated.

Laminge · 19-01-2008, 10:39 AM

Fixed rates have increased over .90basis points in the last 6 months, projections are for another 2 rate rises over 3 months and then a steady decrease

Take that as you will, but at the end of the day it depends if you can afford say a 1.00% rate increase or do you want the security of knowing what you are going to pay for a fixed period

http://www.cannex.com.au/
An excellent resource

Duke · 19-01-2008, 10:51 AM

I have quite a few mortgages, none of them are fixed. My view is based on the same logic as Laminge, but you have to able to afford to be wrong.
(Does that make sense?)

dave289 · 19-01-2008, 11:00 AM

I could probably handle a 1.00% increase but anymore would make things a bit tough.And im worried it may go beyond this and then some.Who knows.I'm thinking of the fixed rate loan becuase i know it wont increase for a certain period.If the then variable rate goes down I might loose a bit of money in paying more interest but not my property if i were to have a variable loan with major increases.I cannot see the interest rates dropping in any major way over the next few years and believe i should go for a fixed loan the more i think about it.

Yellow_Festiva · 19-01-2008, 11:03 AM

Quote:

Originally Posted by dave289

I was wanting to refinance a mortgage that i have and was thinking of getting a fixed rate loan to counter any interest rate rises.Then last night on the telly Aussie home loans John Symonds is saying he would'nt go for a fixed rate as they are to high at the moment and that he thinks interest rates will decrease before to long.What do you guys recommend and if you know of any good rates or deals any help would be much appreciated.

This all depends on may things to be honest. Live in or investment, small or large loan? able to make extra repayments or not? etc.

I just settled a house before Chrissy, left it at a variable rate due to the issues in the US, they are already dropping rates, but have high inflation, which is somewhat of a contradiction???

Anyway, I'm looking at paying off the place ASAP, and also selling off other investments in the next year or 2 and injecting that money into the loan.

Many fixed terms have restrictions on what you can do, repayment wise.

In the end, you need to do what's best for your current and future plans.

Oh, and I read somewhere that in the last 7 years if people were on a variable rate they would have been better off than the people who were on a fixed rate.

dave289 · 19-01-2008, 11:07 AM

What is the percentage difference of a fixed rate as opposed to the current variable rate?

Laminge · 19-01-2008, 11:08 AM

http://intranets.cannex.com.au/surveys/mortgage.htm

dave289 · 19-01-2008, 11:11 AM

Quote:

Originally Posted by Laminge

Did you have a look at the cannex site?

Only breifly but i will have a good look at it later, looks very interesting,thanks for that laminge.

YOOT · 19-01-2008, 07:40 PM

You can opt for a locked rate which will cost you about $500. It will safe guard you against rises, but the locked rate is usually 0.2% higher than variable so it takes two rises to make a gain. However, and this is the best bit, the rate will come down if the interest rate drops below what it was locked at. Sort of like paying for a ceiling but reaping the benifits of a drop.

I did this with my first home loan. I split 80% to a locked rate which is currently lower than marked interest rate (so I am saving) and 20% on variable which is such a small loan, each interest rate rise only makes about $5 a month difference which I offset with a 100% offset account anyway.

In three years when the locked rate is finished I can either re lock it if I feel I need to, or with the equity and some of the loan payed off I may choose to heap it all into one variable loan and pay it off as fast as I can.

Sam · 19-01-2008, 08:08 PM

I have had some good fortune with my last 2 home loans, first one we fixed for 5 years at 6.2%, it was very manageable. Current one we just fixed with ANZ for 10 years at 7.49%. I enjoy not having to worry about interest rate rises too much but would happily pay out the penalty fees to break it if rates drop to around 6 - 6.5 again.

GUTLES · 19-01-2008, 10:26 PM

I'm also refinancing my home loan at the moment. I'm currently on a Variable Rate, not sure whether to go fixed or variable this time. Anyone heard anything bad about One Direct or Rate Busters? They have the cheapest rates at the moment.. I'm currently with the NAB..