All Topics / Finance / 4.99% Fixed for 2 years – to fix or not to fix

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  • Profile photo of ryansmoloneyryansmoloney
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    @ryansmoloney
    Join Date: 2011
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    Gday All,

    I have just been offered 4.99% Fixed for two years.

    Currently paying 5.45% variable

    What is everyone's opinion on the interest rates and do you think that the 4.99% is a good option or wait it out with the variable.

    Profile photo of Nigel KibelNigel Kibel
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    @nigel-kibel
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    The rate is a very good one. The banks know that the current rates will be short term. To me a rate of 4.99% is great, you know that your rate is fixes I would be surprised if his sort of rate was being offered in 12 months time. However I have never been a big fan of the reserve bank and the decisions they make.

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    Profile photo of Jamie MooreJamie Moore
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    Don't fix in an attempt to beat the variable rate – it doesn't usually pan out that way. Instead, fix your loan (or a portion of it) if you need the certainty of what your loan repayments will be each month.

    Having said that, sub 5% rates are quite low and we're seeing a lot of clients fix at present.

    It's hard for anyone to guess where fixed rates are heading.

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of TheFinanceShopTheFinanceShop
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    Some banks are offering less than 4.99% for their 2 year fixed rates. 

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    Profile photo of FreckleFreckle
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    @freckle
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    Hard to say one way or the other what will happen to rates. The AU economy is headed into trouble waters and the RBA will probably look at further cuts but CB cuts aren't indicative of bank funding costs so they bottom at some point regardless of what CB's do. The US market has retail rates around 4.5% while the FED rate is 0.25%. Banks here have indicated their funding costs have dropped and signaled possible out of cycle drops in retail rates.

    The flip side is recent strong deposit growth may evaporate and push bank costs back up again. The falling AU$ will also have some impact on consumer inflation so that may pressure the RBA to hold or even raise rates if they see inflation getting away from them. The RBA would likely see a falling dollar as beneficial for the economy so further interest rate cuts would be a waste of bullets so to speak. If the dollar goes to 90 I think the probability of a rate increase is high. Below 90 almost a certainty. The only question would be timing.

    Profile photo of TheFinanceShopTheFinanceShop
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    I think it will hit 90 sooner than later? Keen to hear everyone else thoughts?

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    Profile photo of FreckleFreckle
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    @freckle
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    TheFinanceShop wrote:
    I think it will hit 90 sooner than later? Keen to hear everyone else thoughts?

    There's strong support between 0.967 and 0.957. There's also up coming weakness predicted around the US$. If it goes to 90 then that signals a lack of confidence in Australia and could mean a resistance to further investment. IMF have the AU$ as one of their reserve currencies. This will be a test of that status. 

    If it breaks 0.955 it could go to 0.85 but I think that's a remote possibility. If the US$ doesn't weaken then the AU$ could track around the mid 90's with a slow drift down. 

    If the US$ does weaken and we go back above par that could be interesting because it would reinforce to markets that its safe haven status is still largely intact. 

    Profile photo of JpcashflowJpcashflow
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    Hi all,

    Westpac are advertising 4,75 watch rates go lower 

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    Profile photo of Jamie MooreJamie Moore
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    Yeah it's there one year fixed rate – it's down to 4.79% 

    Probably more of a marketing ploy than anything. It rolls into their SVR with a measly 0.7% discount  after the fixed year.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
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    Profile photo of JpcashflowJpcashflow
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    @jpcashflow
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    Me mate from NAB has said watch their rates come down too lol

    lets see

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    Profile photo of god_of_moneygod_of_money
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    ANZ is offering 4.99% fixed rates for 3 years through Breakfree package

    Profile photo of oc1oc1
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    @oc1
    Join Date: 2012
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    Too good to refuse. I've just fixed my loan for my block of units that i don't intend to sell.

    Cheers

    Oscar

    Profile photo of Joel.MacdonaldJoel.Macdonald
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    @joel.macdonald
    Join Date: 2012
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    CBA offered a .5% discount to the current variable 2 years ago. Rolled out a huge marketing campaign behind it.

    Something was fishy back then, and they obviously saw rates heading lower.

    I don't feel we are at the bottom with interest rates yet and they obviously are betting on rates to move lower in the short term, but, I agree with Jamie M on this – don't lock it in to beat the variable, make it more of a personal decision to stabilize your cash flow over the next few years

    Profile photo of Amy WhiteAmy White
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    Hmm this thread is giving me food for thought.

    Profile photo of S RobertsS Roberts
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    Join Date: 2013
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    I took the bait and locked in 4.99 for 2 years on one of my loans for an IP.
    It was more for the certainly of repayments than to try and beat the variable.
    Like having a foot in both camps I guess. It also gives me a chance to build more equity in my PPOR.

    Profile photo of FreckleFreckle
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    @freckle
    Join Date: 2012
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    I see HSBC just dropped their 2yr to 4.59, 3yr at 4.79 and 5yr at 5.09. interesting. Just when you thought they couldn't go lower.

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