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

 

Abbott's childcare changes will 'reduce access and add complexity'

The government's childcare assistance package threatens to confuse and intimidate many parents, experts say.

Be careful what you wish for

Remember that chubby little baby who rocked on all fours? Remember how you wished he would start to crawl? Then remember how you felt once he did?

William Tyrrell's parents plead for information as anniversary looms

As the one-year anniversary of William Tyrrell's disappearance draws near, the missing four-year-old's parents have again pleaded with the public for information that could help bring their son home.

Family sleepovers: a tribute to my 1970s childhood

My memories of those nights in my childhood are all about fun: sleepover excitement, staying up late, watching movies we probably weren't supposed to watch ... freedom.

43 minutes of terror: family's agonising wait for ambulance for toddler

It was terrifying. As the minutes ticked by little Cooper Harrison's parents felt more and more frantic.

What not to say to a new mum

Some phrases just pop out before you really think about them, but there are some things you should try to not say to a new mum.

Mummydesking: the new hotdesking

It is a paradise that only working parents of small children can understand: a place to sit for three hours without any interruptions while someone looks after the kids.

Charlize Theron adopts baby girl

A few months after splitting from Sean Penn, the actress Charlize Theron has adopted a baby girl.

Facebook CEO Mark Zuckerberg shares painful truth behind wife's pregnancy

Facebook chief executive Mark Zuckerberg has shared a brutally honest truth about pregnancy in the hope it will help others through dark periods.  

Sugary drinks blamed for removal of toddlers' rotten teeth

Children as young as 18 months are having multiple rotten teeth pulled out as parents feed toddlers soft drinks through sipper bottles, and chocolate biscuits and Milo as bedtime treats.

Mum accidentally fake tans baby

Many of us have fallen foul of a bad fake tan or two, but this little guy's started a bit earlier than most.

Does this three-month-old say 'I love you'?

YouTube user Ted Moskalenko was filmed by his wife, Michelle, as his baby son, Ben, engaged in some baby chat.

Kids break out of daycare centre, cross busy highway

Two children broke out of an early childhood centre and wandered across a four-lane road.

Why I'm glad to be an indulgent granny

The phone calls started a couple of weeks ago. At about 5.30 each evening - if I am lucky - I will be greeted by a sweet, excited voice declaring: "'Allo Annie".

Newborn found in toilet at German airport

A newborn baby found abandoned and extremely ill in a bathroom in the Munich airport is doing well.

Is this the worst relationship advice ever published?

You sometimes have to wonder whether relationship/sex advice from magazines is designed to help or humiliate.

How you talk to your baby now can impact social skills later

People used to think that social skills were something kids were born with, not taught.

Three truths about C-section mums

Lately I've been thinking about the caesarean stories and the brave women who birth their children with strength and beauty.

Scientists predict when you should start a family

Scientists have calculated at exactly what age you need to start trying to get pregnant to have the best chance of realising your dream. 

Differently abled child

When 'protecting' a child is really a cover for judgement

Why are people so concerned for this happy child and his mother?

Get your FREE Baby & Toddler Show ticket!

Get your free ticket to the Sydney Essential Baby & Toddler Show for September 25-27 - register online now.

 
Advertisement
 
Advertisement
 
 
 

What's hot on EB

When toddlers have strange obsessions

When it comes to two-year-olds and birthday cakes there are a few requests that are usually at the top of the list. But a cake featuring a local personal injury lawyer?

When Mama Bear strikes

When we become mums, our instinct to protect our children and keep them safe from harm is so strong we're often likened to a Mama Bear protecting her cubs.  

Immunity boosters for kids

There are no guaranteed ways to avoid the dreaded winter illnesses completely, but there are ways we can boost our children's immunity.

Yes, you can get pregnant before your period returns post-baby

After giving birth, the last thing you want to think about is contraception. But you can get pregnant before your period comes back.

Mum shares portrait of her proudly breastfeeding three-year-old

Jade Beall usually chooses to breastfeed her son, now 3, in private. This week, however, she shared portraits of her breastfeeding her preschooler.

Dealing with a toddler's morning tantrums

Your schedule is not important to your two-year-old, and you cannot convince her otherwise. So what can you do?

My baby's first seizure

It was 1am on a cold winter's night when I woke suddenly to the screams of my 12-month-old son. Our lives were about to change forever.

MP breastfeeds baby during parliamentary session

An Argentinian mum and politician has caused a stir on social media after being filmed breastfeeding her baby.

Heartbreaking moment mum kisses her one-week-old goodbye

At 11.07am on April 2 this year, Sarah Marriott welcomed baby Sebastian into the world.

The best age to get married (according to the latest study)

Not too young, and not too old. That's reportedly the best age to get married. Not everyone agrees.

Fellow diner rewards mum after toddler's tantrum

Parents of toddlers everywhere know the feeling. After working up the courage to take your child out for lunch or dinner in public you are rewarded with a mid-meal meltdown. 

IVF gender selection being considered for Australian parents

Couples using IVF may be able to choose the gender of their babies and women could be financially compensated for donating their eggs.

The amazing Tee Pee bed and kid-friendly Frankie Bunk bed

These kids' beds definitely fit the brief of providing personality and personal space for little people who are moving up in the world.

The funny things kids say when you're pregnant

Since becoming noticeably pregnant, my son has taken more of an interest in the sibling he'll soon have.

The real problem with having one child

In this age of political correctness, it seems the one subject still subject to discrimination is that of the Only Child.

The fire hazard in more than 70,000 Australian homes

So far, 206 Samsung washing machines have caught fire and some have exploded. But many remain in people's homes.

How having a baby can bring on OCD

We all know that having a baby can turn your life upside down - and it can also bring a raft of new anxieties and worries.

IKEA begins massive safety campaign after two toddler deaths

Two children were killed when pieces from their Malm furniture line tipped over.

Which beauty treatments are safe in pregnancy?

Is it safe to use fake tan, hair dye and nail varnish during pregnancy?

A dad's guide to hyperemesis

I am in no way qualified to advise women on how to cope with hyperemesis, but I've learnt some lessons that might be worth sharing with other partners.

The five ways I know my 'baby' is no longer a baby

The truth is, I can no longer deny that my walking, babbling, somewhat-independent little miss is no longer a bona fide 'baby'.

 

FREE TICKET

See Pinky McKay live in Sydney

Get your free ticket to The Essential Baby & Toddler Show and save $20 - register online now!

 
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.