Jump to content

A good time to fix our home loan?
4.99% for 2 years


  • Please log in to reply
13 replies to this topic

#1 BookishOne

Posted 23 February 2013 - 04:32 PM

Just wondering whether people think that this would be a good time to fix our home loan rate - or if it would  be a bit premature.

We have a large-ish loan (more than I would like anyway!) and have negotiated our current rate of 5.61% with one of the big 4 banks. We are happy to stay with them and have no interest in re-financing. They are offering a fixed rate of 4.99% for two years, with the option to fix all or part of the loan.

My thinking is that 4.99% seems a really good deal and I can't see rates falling that low, and remaining that low for long. I calculated the difference over the two year period to be around $5000 if we remained at 5.61% compared to if we fixed (obviously I realise that rates are likely to move in the two year period so this is not entirely accurate, it was just to get an idea).

I would fix most of the loan, and leave a small amount variable (say 30,000) so that we could keep our offset account against this, as well as funneling any extra repayments, as well as the savings we make from fixing the rest of the loan, into the variable portion. This way we would not be in any danger of paying anything over the 'allowable' amount of extra repayments into the fixed portion of the loan.  

WDYT - Smart move? Or do you think the variable rate is likely to drop even further?

#2 LittleMissPink

Posted 23 February 2013 - 04:42 PM

From what my broker told me, if they are fixing that low, then the bank expect their variable rates to go lower at some point in that 2 years.

#3 relz28

Posted 24 February 2013 - 08:47 PM

Im just about to call the bank and lock mine in tomorrow!  Im at 5.6% at the moment and I think 4.99 is great and im thinking if they fall past that (which I doubt) then 2 yrs isn't long at all.  original.gif


#4 BookishOne

Posted 26 February 2013 - 08:11 AM

Thanks for your replies!

Relz28 - that is what I am thinking, yest it is a risk, but it is only for 2 years so it wouldn't be the end of the world if the rates dropped that low (which I also doubt will happen...)

#5 Therese

Posted 26 February 2013 - 08:16 AM

I think I would do it.

#6 Madnesscraves

Posted 26 February 2013 - 08:21 AM

I was considering this too, but I am also of the opinion if banks are offering low interest rates they do think it will fall below that.

Believe me, it's so tempting to fix my rates on that too for 2 years. I wouldn't mind some extra $$ back in my pockets. I would be saving a decent amount per month and it would be nice to have some luxuries back.

I'm really hoping that the variable does go lower, though, I am worried that banks are going to start refusing to lower the variables and only lower on fixed to encourage people to go fixed in the long term for their (banks) benefit.

#7 AllyK81

Posted 26 February 2013 - 08:22 AM

Finance is not my forte, but my husband is a financial analyst. His view is and has always been not to lock in rates.

He says they lock you in and almost always will offer something lower and reasons that why would they let you lock it in if they didn't think it was in their best interests?



#8 PrincessPeach

Posted 26 February 2013 - 08:39 AM

I wouldn't be locking it in at that rate just yet.

As one of the financial guru's said, the time to lock in the rates is the moment when the fixed rate has just crept above the variable rate.

Also I have recently seen commercial loan rates at 4.5% fixed, so the banks are projecting a massive cut in interest rates over the next few years. Commercial loans are normally higher than a home loan.

#9 SummerStar

Posted 02 March 2013 - 08:20 AM

I personally would do it at that rate. We are about to fix ours at a bit higher rate. Our reasoning is that we want to know how much we will be paying as a set amount for the next 2 years because our situation is changing slightly.
So for us that option suits just for the next two years.


#10 MrsLexiK

Posted 02 March 2013 - 08:31 AM

We're thinking of doing it because we like the security whilst I am on mat leave which will be for 1 yr but I most probably will then quit and start studying and/or working part time.  My thoughts is the banks won't drop the variable that much more but will probably move on the fixed a bit.

#11 roses99

Posted 02 March 2013 - 10:17 AM

Banks never lose. They set up the rates that way. So, over the longterm life of a loan, it is almost always better to have a variable loan and ride the ups and downs, than to fix.

That, of course, depends on your ability to be able to ride the ups and downs. If it's a large loan, and you need the financial security of knowing what your repayments will be, then it is worth doing.



#12 BetteBoop

Posted 02 March 2013 - 10:22 AM

QUOTE (AllyK81 @ 26/02/2013, 08:22 AM) <{POST_SNAPBACK}>
Finance is not my forte, but my husband is a financial analyst. His view is and has always been not to lock in rates.

He says they lock you in and almost always will offer something lower and reasons that why would they let you lock it in if they didn't think it was in their best interests?


Yes. They have highly trained financial analysts to give them advice on what to do with their fixed interest rates.

They would not offer a rate that is lower than the variable rate is predicted to be in that period of time.

Remember that the big four banks post billion dollar profits every year. They don't manage this by getting interest rate predictions wrong too often.

ETA: I don't like fixed rates if they come with fixed repayments and big exit fees. I understand some people like the predictability of repayments but if your circumstances change, these loans often lack flexibility. So I would personally want to consider what the terms and conditions of a fixed rate are before locking into one, based only on an attractive rate.

Edited by BetteBoop, 02 March 2013 - 10:24 AM.


#13 Mumma_G

Posted 02 March 2013 - 10:30 AM

We fixed our interest rate for 2 years just under a year ago because we knew I had one year left of uni and this would give us the security of knowing that our interest rates would not go up in that time. Our fixed interest rate is still lower than the variables I have seen advertised in our banks window and on their websites.

We used to be on variable but over a 4 year period the interest rate when from 8% to 4% so we paid a lot of our loan by simply maintaing our payment rate.So we got lucky. But what if it went the other way ... like it did in the 90's and interest rates went about 14% many people got caught out.

#14 Threelittleducks

Posted 02 March 2013 - 10:43 AM

I can't comment on whether or not to fix in at that rate.

But what I wanted to say was that our bank offers a fixed rate loan with a full off-set account. It seems unusual but we loved it. We fixed our rate around 6 years ago for a 3 year period and had an off-set account as well. We fixed as our stock broker's economist at the time was forecasting rates to rise. Rates did rise over that time and we did very well. Then our fixed rate expired just as the rate began to fall towards current levels.

We're now once again thinking about whether to fix again. It's a tough decision.

Good Luck




1 user(s) are reading this topic

0 members, 1 guests, 0 anonymous users

 

The day my daughter almost drowned

We had six adults standing there, so I felt like I could relax a bit. After all, what could go wrong with so much supervision?

Sydney siege survivor names baby after victim Katrina Dawson

A Sydney barrister who survived the Lindt cafe siege has named her newborn daughter after her best friend who died in the tragedy.

Banishing bloat

How to avoid a bloated tummy

Here are some foods to eat in order to escape feeling ghastly and gassy.

The great new picture book for anxious kids

My son is a worrier by nature. I learnt long ago that it was completely pointless to say to him "Don't worry about it!".

Budget stripped more than $15b from families

The combined impact of the two budgets for low and middle income people was "devastating", new analysis by the Australian Council of Social Service shows.

Pregnant women urged to get flu shots

As the winter chill starts to arrive, NSW Health is urging pregnant women to get their flu shots.

65-year-old gives birth to quadruplets

A 65-year-old German woman, who already has 13 children, has given birth to quadruplets.

What you need to know about pregnancy and health insurance

It's not just waiting periods that couples need to consider - there are other factors to consider when thinking about health insurance.

Yummy mummy

Nicole Trunfio breastfeeds baby on Elle magazine cover

Australian model Nicole Trunfio has taken the concept of multitasking to a fashionable new level for Elle Australia.

Warnings after baby girl died while sleeping in bouncer

Parents have been warned about the dangers of letting babies sleep in bouncers and swings following the death of a three-month-old girl.

Coping with fatigue as a parent

Sleep deprivation is a real hazard of caring for a baby. But there are ways to manage the challenges of fatigue better.

A very 21st century issue: parents, parks and smart phones

It's not all the parents, and it's not all the time, but there is often at least one doing it. And sometimes, that 'one' is me.

Appliances

Faulty washing machines linked to house fires

More than 80,000 faulty Samsung washing machines pose a fire threat in homes throughout Australia despite a nationwide recall of the machines.

'I had a lotus birth and I loved it'

Lotus birthing is not all that common, but for a number of women it feels like the most natural thing to do.

7 things you might not know about postnatal depression

Despite its widespread nature, there is still a great amount of mystery surrounding PND - and it's important to try unravelling as much of that as we can.

Is your family's car part of the world's biggest safety recall?

More than 50 million vehicles recalled for potentially lethal airbag fault - is your car affected?

Why drinking water can be deadly for babies

H2O is one of the necessities of life, but for babies a seemingly harmless amount of water can be fatal.

Mother-in-law faceplants during proposal

He had it all planned: a romantic proposal on a windswept beach. The whole family would be there so they'd all be able to celebrate the joyous moment together.

A preschooler suddenly goes mute - and it's not just shyness

When our son stopped talking, our sense of loss was painful and acute.

The mums who ask for a 'wife bonus'

They run their homes like domestic CEOs and work tirelessly to improve their family's social standing. And now, according to a new book, they want an annual perk from their husbands.

Woman shares photo of dimple on breast to warn others of cancer risk

A widely-shared Facebook photograph of a British woman's breast has raised awareness of a more subtle breast cancer symptom.

Starting a family despite a low sperm count

"I'd never really failed a test - how could I fail this particularly manly test?"

It's official: we must better protect our kids from toxic lead exposure

New guidelines have been released, aimed at reducing children's harmful exposure to lead. But they still don't go far enough.

Trouble-shooting toddler social skills

Chances are your toddler's behaviour is all completely normal - but here's how to tackle some common social problems.

Helping your first-born welcome a sibling

We did sigh with joy at the arrival of a royal princess - but, mostly, we sighed with pity at the sight of Prince George being taken to meet her.

Farewell, daytime nap

I've been in denial and I'm not too proud to beg, but it appears I must accept the fact that you have gone. I need to let you go.

The identical triplets who are one in 50 million

The father of identical triplets born in a Texas hospital says his three daughters, including conjoined twins, are "a miracle" sent by God.

Seven questions you should be asking about your health cover

If the last time you assessed your health cover was five years ago, there?s a chance it may no longer suit your needs. To ensure it?s still right for your family, click here for seven questions to ask.

 
Advertisement
 
Advertisement
 
 
 

What's hot on EB

How to use gas effectively in labour

Many women in labour don't use gas effectively and suffer more side effects than benefits. Here's how to get the most out of this pain relief option.

'He has gastro but that's okay, right?': sick kid etiquette

We cannot place all children who are sick in a bubble till they recover, but we can give other parents a choice about exposing their kids to them.

Ada Nicodemou: 'I can never be completely happy again'

Home and Away actress Ada Nicodemou has opened up about the loss of her stillborn baby.

10 things to consider when you're thinking about trying for a baby

Before you start tracking your menstrual cycle and reading up on the best positions to get pregnant, there are a few other things you may want to consider.

How special surgery and IVF can create a post-vasectomy baby

Cricket legend Glenn McGrath and his second wife Sara are expecting their first child together, thanks to IVF and a delicate surgical sperm retrieval process that helped the couple to conceive.

Belle Gibson's mother 'disgusted and embarrassed'

The mother of disgraced wellness blogger Belle Gibson has accused her daughter of lying about her childhood in an attempt to garner public sympathy.

Doctor's mobile phone 'left inside c-section mum'

A new mum claims a doctor left his mobile phone inside her after delivering her baby via caesarean section.

I'm a mum and I'm following my dreams

I want my kids to know that no matter what happens in life, you can still be who it is that you've always wanted to be.

Those first daycare days

I had this innate 'mum' moment the other day.

'If one person had listened, my life would have been so different'

Katherine's father will die in prison for the horrifying sexual abuse of his daughter. Yet she is the one with the true life sentence.

This new plan undermines breastfeeding and baby health at everyone's expense

Mothers, babies, the health system and the wider society are going to pay the price of this new budget.

Couple to celebrate terminally ill baby's birthday in unique way

Baby Jai Bishop has lived at Starship Hospital for the past seven months, with his parents flying back and forth from Hokitika, 1100km away, to be by his side.

Life On Mars

It's men who need 'retraining', not women

We are all responsible for our own behaviour. Telling victims to harden up is wrong.

Baby Gammy's dad tries to claim charity money

The biological father of baby Gammy has reportedly tried to access charity money raised for the little boy's medical costs.

Where are the childcare places?

It?s all very well to encourage women to work if they choose to, but how can the measures lead to increased workforce participation when women are once again left holding the baby?

The pain of not having babies and not knowing why

After seven years of wishing, hoping, crying, punching pillows and shouting "why me?!", the end result is more than I ever thought possible.

Getting your family finances in order

Whether you're after a new car for a growing family, a bigger house, or are just fixing up your finances, here are the basics on borrowing.

Mum shares graphic selfie to warn against tanning

A mum has shared a graphic photo of her skin cancer treatment as a warning to others.

Does parenthood make us happier?

We can certainly gain higher levels of happiness when we become parents, but the trick is to not get overwhelmed by the pressures of raising our kids.

No, having a dog is not like having a human child

It's obvious these people dote on their pets, but they're barking up the wrong tree.

 

Top baby names

Baby Names

The numbers are in and we can now bring you the 2014 top baby name list for Australia.

 
Advertisement
 
 
Essential Baby and Essential Kids is the place to find parenting information and parenting support relating to conception, pregnancy, birth, babies, toddlers, kids, maternity, family budgeting, family travel, nutrition and wellbeing, family entertainment, kids entertainment, tips for the family home, child-friendly recipes and parenting. Try our pregnancy due date calculator to determine your due date, or our ovulation calculator to predict ovulation and your fertile period. Our pregnancy week by week guide shows your baby's stages of development. Access our very active mum's discussion groups in the Essential Baby forums or the Essential Kids forums to talk to mums about conception, pregnancy, birth, babies, toddlers, kids and parenting lifestyle. Essential Baby also offers a baby names database of more than 22,000 baby names, popular baby names, boys' names, girls' names and baby names advice in our baby names forum. Essential Kids features a range of free printable worksheets for kids from preschool years through to primary school years. For the latest baby clothes, maternity clothes, maternity accessories, toddler products, kids toys and kids clothing, breastfeeding and other parenting resources, check out Essential Baby and Essential Kids.