Is it now time to Fix?

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blocka
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@blocka
Join Date: 2010
Post Count: 38
February 27, 2012 - 9:04 pm
Also i recently rang my lender (westpac) and told them i could get a better deal else were and they swiftly dropped my rate by 1.0% it was quite a shock at how easy it was…
RING YOUR LENDER
Jamie Moore
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@jamie-m
Join Date: 2010
Post Count: 5,069
February 27, 2012 - 10:00 pm
Hi Blocka
When did you call?
There was a short window of opportunity recently when some of the majors were providing 1% discounts off their SVRs (dependent on overall borrowings and LVR) It's not such a competitive environment at present.
Cheers
Jamie
Jamie Moore | Pass Go Home Loans Pty Ltd
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Paullie
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@paullie
Join Date: 2009
Post Count: 217
February 28, 2012 - 11:10 am
blocka wrote:
Stick to variable for now !
What makes you say that ?
Mick C
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@shape
Join Date: 2010
Post Count: 1,099
February 28, 2012 - 11:48 am
blocka wrote:
if the banks lend at lets say variable 6.5% and fixed 6.0% and people choose fixed, and rates go up 0.5 % the bank looses by 1.0% BUT if rates go down the bank wins or the losses are less,
so if rates are going up which i dont think they will why would they banks lock people in so low ? makes no sense unless they know they will be dropping rates soon and if they can lock people in at higher then variable they win……..just my thoughts
The bank will ALWAYS win….when they fix your rate, they will also secure the funding with their funding line at a set rate for a set period of time- They will always maintain their profit margin. The only risk they take is YOU defaulting on the loan….interest going up or down is not a major risk factor for the bank to consider; as they migrate this change into their business and variable residential loans
Bank loses when they have poor management , risk control or bad funding source/business model.
If your a share holder of one of the big 4, you could access their annual report which provides a break down on their profit – it wont tell you how much their funding cost are etc…BUT Generally speaking the banks makes a larger profit from variable then from fixed,..even if the rate does up or down..
Regards
Michael
Mick C | Shape Home Loans
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blocka
Participant
@blocka
Join Date: 2010
Post Count: 38
February 28, 2012 - 9:05 pm
Shape wrote:
blocka wrote:
if the banks lend at lets say variable 6.5% and fixed 6.0% and people choose fixed, and rates go up 0.5 % the bank looses by 1.0% BUT if rates go down the bank wins or the losses are less,
so if rates are going up which i dont think they will why would they banks lock people in so low ? makes no sense unless they know they will be dropping rates soon and if they can lock people in at higher then variable they win……..just my thoughts
The bank will ALWAYS win….when they fix your rate, they will also secure the funding with their funding line at a set rate for a set period of time- They will always maintain their profit margin. The only risk they take is YOU defaulting on the loan….interest going up or down is not a major risk factor for the bank to consider; as they migrate this change into their business and variable residential loans
Bank loses when they have poor management , risk control or bad funding source/business model.
If your a share holder of one of the big 4, you could access their annual report which provides a break down on their profit – it wont tell you how much their funding cost are etc…BUT Generally speaking the banks makes a larger profit from variable then from fixed,..even if the rate does up or down..
Regards
Michael
BUT does history not show us that when fixed is lower than variable rates are on the way down !
blocka
Participant
@blocka
Join Date: 2010
Post Count: 38
February 29, 2012 - 1:47 am
Paullie wrote:
blocka wrote:
Stick to variable for now !
What makes you say that ?
well i believe rates will still come down some more lets see what next tueday brings
Mick C
Participant
@shape
Join Date: 2010
Post Count: 1,099
February 29, 2012 - 1:53 am
FYI – Fixed rate is starting to go back up.
Bankwest has increased it by 0.50% as of this Monday.
Westpac has increased it by 0.20% as of last week
Another banks are set to follow suit…rem fix rate does NOT run in conjunction to the variable rates decisions….different funding lines.
I would say fix if it works to your advantage:
1. It allows you to budget
2. Improves your position
3. You can afford the fix rate on offer + it make sense.
Mick C | Shape Home Loans
http://www.shapehomeloans.com.au/
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Same Banks. Better Rates. Served With a Passion.