Interest Rates - To Fix or Not?

test

4 Nov 2009, amber

yes - we all need that crystal ball dont we - lets hope that you are right Daph and they dont increase rates for a while again now. Anita

15 Oct 2009, Anita Marshall

Yes I was wrong too - i thought they would leave them alone. I personally think they have raised them too quickly for the Australian economy - NSW isnt too bad but QLD is still being quite affected by the credit crunch. Lets hope that is the last of the rises for a while.

15 Oct 2009, Daph

Looks like I was proven wrong. The unemployment figures seem better, so a further interest hike is on the cards...

8 Oct 2009, Robert James Morrison

It will be interesting to see what the RBA does today (Oct 6). My guess is that they will stay where they are for this month (Oct), (whilst the economy overall is definitely recovering) the unemployment situation has not really improved.

6 Oct 2009, Robert Morrison

i must say i was never a lover of Fixed Loan Rates till NOW , i have just Fixed my Loans -

i think the thing to remember when thinking about whether to fix or not to fix - is your situation right at this present moment , i am fixing my loans because i want to know what what my repayments will be for the next 2years , and im not worried at all if by any chance interest rates go down

5 Aug 2009, Jacqui

The reserve bank left interest rates unchanged today - thats good news but how long will they stay low? who knows.........

4 Aug 2009, Anita Marshall

And Rams will be goign up on Thursday.x

4 Aug 2009, Anita Marshall

I think it might be better to pay about 0,80% more to have peace of mind so I am fixing my home and investment loans but will be leaving my line of credit as it is for the flexibility.

3 Aug 2009, Tony

St George have also announced that their fixed rates will be going up on Tuesday 4th August. Anita

1 Aug 2009, Anita Marshall

I am staying on variable. Its all well and good to say you want to lock into the low rates now but the fixed rates are not low anyway.

1 Aug 2009, Lorraine

I believe rates are going to stay down - unemployment and housing are still a big problem within Australia and the RBA/interest rates are the biggest influence on the housing market/business sector- the government cannot afford for the rates to go up too much yet or it will affect the lack of housing even more - people wont be buying owner occupied properties if rates go up and it will only be us smart investors that will be buying so the housing crisis will worsen further.

1 Aug 2009, C. Reynolds

I locked into a fixed rate with Westpac about a month or so ago for just above 5% - happy I did- I chose a 3 year rate.

1 Aug 2009, Matt

Dear Anita & Jacqui

Your newsletter has come at exactly the the right time.

I was talking to a mate who is a partner in a large investment usiness, who thought the only way the interest rate are going to go is up !! He also thought this would be pushed along by some aggressive inflation. He also said to me that it could be a very good time to lock half of your loans in at a fixed term rate now if you were thinking of it !!!

Jacqui helped us get our loans sorted out just over 12 months ago to purchase our investment unit in QLD and we have just put in our tax return for the first return with the investment, hoping it will be a good return.

1 Aug 2009, J & G R

Who would know what is best for us without that crystal ball- I think I will probably stay variable - the banks will always load the fixed interest rates in their favour whenever they can - they are out for profits so fixed rates are generally going to cost us more in the longrun most of the time I believe.

1 Aug 2009, Mark

Just got word that Westpac will be increasing their fixed rates as of the 4th August so if you are going to lock anything in with them it would be wise to do that early next week. Anita

31 Jul 2009, Anita Marshall

I have decided to fix mine - although I am going to pay 0.80% above the variable rate I am just more comfortable knowing that my rate is not going to change for the next 3 years.

31 Jul 2009, Susan

I couldnt decide so i have fixed half and half. Found this information very informative though. Thanks.

31 Jul 2009, Louise

One really needs to consider what to do right now, but more importantly if you fix, is this best for you or the bank?

Given the small margin's the banks keep complaining about in the variable sector, are the banks trying to frighten people into jumping into much more expensive fixed rates, for fear that they might miss out if rates continue to rise? Some are suggesting that the fixed rates might even come off a little by the end of the year, to maybe capture a second wave of more profitable funds for the banks. Call me cynical, but I wouldn't be surprised.

Statistically speaking, most people who stay variable tend to come off better in the long run. In my view there are 3 reasons to have a fixed rate. 1. You just can’t afford to pay more than the current rate (typically someone with one income), 2. You know you are going nowhere and you just want to set and forget (an investor) or 3. You have a great crystal ball (simply lucky).

I liken fixing interest rates to a sort of insurance. It’s great to be fixed if the rates go up (hence the protection) but if the rates go down, just like an insurance policy you don’t claim on, there is no refund on the policy cost.

I urge borrowers to think about their position carefully and then make an informed decision as the wrong one can prove to be very costly.

30 Jul 2009, Wayne Dickerson

Just a few words to continue on from Anita's comments. I've just recently approached Westpac about "Interest Rates" and their comments were similar to Antia's. They said, "Their Senior Finacial Advisor don't see interest rates rising dramatically in the near future, they may vary to some small degree", but don't see any dramatic change until 2010. by then who knows which way they will go. I often watch T.V. and read different articles and it depends who you want to believe, which way they will go. Not being in the finacial sector myself, I'm taking advantage of the lower variable rate and also it allows more flexibility. I guess to be on the safe side it would be wise to go 50% fixed and 50% variable.

30 Jul 2009, Ross

Fixing now would be madness. It's unlikely the RBA will lift rates before the end of the year and after the bad results they caused last time they rushed in to raise, I believe they will take a gentle approach. Personally, I couldn't see them lifting rates more than 25pp at a time once they do start to move up, so we would have to encounter 4 rises before we are worse off. I guess it comes down to a personal choice and some people like the security of knowing what their payments will be for the next 3 to 5 years but these blood sucking leeches we call banks prey on customers putting it all in the too hard basket. We all need to take some responsibilty for our own actions so a little bit of education & diligence can see anyone saving thousands of dollars & years off their mortgages with just a little self education. A quick google search will show plenty of hints to help reduce the interest you pay.

29 Jul 2009, Cruise

Ok, i am going to be the first to comment on my our blog.

This is such a hard question to answer. If you watch the money shows, read the financial papers, listen to the news the conflicting views make it very confusing.

One financial adviser will say to fix now becuase rates are sure to rise but another says that because fixed rates are about 1% above variable the rates would have to rise fairly soon and fairly quickly for there to be any benefit in a fixed rate.

Some market analysts are suggesting that we lock in for 3 years now, others are saying to stay on variable and take advantage of the lower rates that we are experiencing for the first time in many years.

The downside to fixed rates is that they are very restrictive so if you are going to fix make sure you are fairly sure that you are not going to want to change that loan around during the fixed period or you will pay the penalty for doing so!

For a more detailed article follow this link to the article in our recent Haven newsletter:-

http://www.afgonline.com.au/newsletter/winter09/01/

29 Jul 2009, Anita Marshall

 
Leave A Comment

Name *

Email * (will not be published)

Website

Comment *

Please type the characters you see below