4.99% Fixed for 2 years – to fix or not to fix

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

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.

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. 

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

ANZ is offering 4.99% fixed rates for 3 years through Breakfree package

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

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.