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  • Profile photo of Ben CurtisBen Curtis
    Participant
    @ben-curtis
    Join Date: 2013
    Post Count: 3

    Does anyone have an opinion about fixed interest rates and what the banks will do if the cash rate drops.

    The Investors club are saying that now is a good time to lock in BUT I don't want to do it too early.

    Profile photo of Josh AthertonJosh Atherton
    Member
    @josh-atherton
    Join Date: 2011
    Post Count: 269

    Hi Ben, 

    What's your strategy for the property you are considering fixing?

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069
    Ben Curtis wrote:
    Does anyone have an opinion about fixed interest rates

    They're great if you need to know what your repayments are going to be each month. So from a budgeting perspective it can be handy. They're not so great if you require some flexibility in your loan – like linking an offset, making additional repayments, redrawing, etc. If you need to access equity in the future than you need to be reasonably certain that it's a possiblity with your lender – otherwise you might find yourself in a position where the only way you can extract equity is via an external refinance to another lender – which means breaking your existing fixed loan which won't be cheap.

    I also wouldn't fix in an attempt to beat the variable rate over time – it doesn't always happen that way.

    What will fixed rate do in the short term? I have no idea.

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Ben CurtisBen Curtis
    Participant
    @ben-curtis
    Join Date: 2013
    Post Count: 3

    Thanks Jamie

    It is an investment property and I am definitely hoping to access equity from this property in the future so I will look into this with my bank

    cheers

    Ben

    Profile photo of Jamie MooreJamie Moore
    Participant
    @jamie-m
    Join Date: 2010
    Post Count: 5,069

    No worries Ben.

    Ask them specific questions about their cashout policy at certain loan to value ratios.

    Also get them to check how your borrowing capacity stacks up when accessing equity and purchasing another property (assuming that's why you need to access equity).  The reason I say this is because most lenders who provide cashouts for property purchases (assuming that's the purpose) will want to make sure that your borrowing capacity is high enough (based on their own internal calculators) to purchase the next property (even if you're taking out the next loan with another bank).

    Cheers

    Jamie

    Jamie Moore | Pass Go Home Loans Pty Ltd
    http://www.passgo.com.au
    Email Me | Phone Me

    Mortgage Broker assisting clients Australia wide Email: [email protected]

    Profile photo of Ben CurtisBen Curtis
    Participant
    @ben-curtis
    Join Date: 2013
    Post Count: 3

    So does anyone have an opinion about fixed rates and if they could drop further???????????????????

    Profile photo of GrantMckGrantMck
    Member
    @grantmck
    Join Date: 2013
    Post Count: 36

    Hi Ben,

    There is a feeling in the market at the moment that the RBA will look at another 25 basis points drop in the near future, what does this mean to the Lending Institutions?

    The Lenders have not historically always forwarded the RBA reduction to consumers, so it is always an unknown until it happens. As Jamie pointed out, there is more to Fixing Rates, and as Josh asked, what is your Strategy as this is important to understand so that you structure your finances to succeed, not hinder your strategy moving forward.

    Interest Rates have never been this low for many years, the only time I saw a lower rate was with Westpac at 3.99% Fixed as a ploy to get market share a few years back, this was not advertised but offered through brokers. 

    Regards Grant

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