Westpac are offering to take my existing variable loan (5.46%) and fix whatever amount I want at 4.99%. I realise I may be able to get a basis point or 2 lower eleswhere, but then there would the hassle of new application processes and fees. In the macro view, I am keen on fixing with my current provider.
I think that you will find Westpac following the CBA down very shortly. Maybe that won't mean much to you if you don't have a large loan. IMHO every little but helps.
Westpac have kept their 2 and 3 year rates at 4.99%
Any expressed market opinion is my own and is not to be taken as financial advice
The Greater Building Society has cut its one year fixed home loan rate by 40 basis points to 3.99% ahead of Tuesday’s Reserve Bank meeting where the cash rate is expected to be cut to 2.5%.
The Greater home loan rate will be available from Monday, August 5, as part of a packaged home loan rate offering.
The current rate stands at 4.39%.
A search across mortgage comparison websites revealed that no other lender is currently offering a home loan rate below 4%. It continues a trend of lenders cutting their fixed-rate loans.
The comparison rate will be 5.44%.
The Greater will also be cutting two other one year fixed home loan rates on Monday by 40 basis points.
The Great Rate Home Loan will have a 4.19% interest rate and a comparison rate at 5.33%, while the Standard Home Loan will have a 4.55% interest rate and a comparison rate at 5.69%.
The Newcastle Permanent Building Society currently offers the next lowest one year fixed home loan rate at 4.39%, with the comparison rate at 5.56%
The decision by the RBA to cut the cash rate to a new record low of 2.5% will have many borrowers re-assessing their current mortgage and pondering whether now might be right time to fix their home loan rate.
Mortgage comparison website Mozo.com.au has compiled a list of some key insights that will help guide your thinking on this issue:
Assuming all lenders cut rates by 25 basis points, the average variable rate for a typical $300,000 home loan will drop to 5.28% in August.
Even though variable rates are set to hit new lows this month, the top variable rate on the market is still likely to be at least 50 basis points higher than the lowest current fixed rate (3.99% one-year fixed rate from The Greater Building Society).
We’d have to see two more 25 basis point cuts by the Reserve Bank before variable rates come close to matching the lowest fixed rates on offer.
Given the widening gap between variable and fixed rates, it’s a great time to consider fixing or splitting your loan to take advantage of some of the low fixed rates on offer right now.
However, fixing 100% of your loan may not be the best option for every borrower as it leaves you with less flexibility over your repayment and switching options. The ability to make extra repayments on fixed home loans can be limited and penalties generally apply to early loan payout.
Splitting your loan by fixing half and keeping the other half variable allows you to take advantage of the record low fixed rates on offer right now while maintaining flexibility over the variable portion and hedging your bets on any further rate cuts.
The RBA lowered interest rates yesterday to a record 2.5% and this will no doubt send the banking world into a hyper competitive frenzy as each lender competes for market share.
Banks love it when borrowers lock in their debt because it means they are tied to them for a fixed period so fixed rate loans will hot bed of competition in the coming months.
When the banks promote their loan products the focus is almost entirely on the headline rate but you really need to look through these numbers and determine the right loan for you.
All the major banks have very competitive fixed rate loans at the moment with the three-year rates ranging from 4.99% to 5.19%. While it is great to have certainty over your interest payments you also need to consider the rate you pay once the fixed term ends.
In some cases the interest rate at the end of the loan term will revert to the standard variable. While other packages will provide with an ongoing discount of up to 1% off the standard variable for the life of the loan.
Although you will be in a position to renegotiate your loan at the end of the fixed term many people are busy and neglect this part of their strategy. It is not in the banks interest to let you know you are being ripped off so make sure you negotiate your discount before you lock in your loan.
One of the most competitive three year fixed rate loans at the moment has a headline interest rate of 4.82%. While this looks very enticing on the surface it does come with restrictions.
First you are only able to lock in 50% of the loan amount and the other half must stay variable. With this loan you may get some benefit from the lower fixed rate component but then lose this with a higher variable component.
Also the gearing on this loan offering is limited to 75% of the property value. For first homebuyers or borrowers with a small amount of equity this loan will not be suitable.
While locking in you debt will provide you with some level of comfort, paying off your debt should be the ultimate focus.
Some loans do not allow you to make any additional repayments over and above the interest repayments. This means you will be running on the spot and not paying off any principle during the fixed term period.
Many banks allow you to pay off some principle each year but this is usually capped at $5,000 to $10,000. However, at least you will be chipping away at the loan and reducing the amount of interest you pay.
Further no fixed rate loans allow you to harness the benefits of an offset account which reduces you loan amount on a daily basis depending on how much money you have in your day to day banking account. It maybe a better option to lock in part of your loan on a fixed rate and leave the other variable. This will allow you to use an offset account and make unlimited repayments.
Australian Property Forum is an economics and finance forum dedicated to discussion of Australian and global real estate markets and macroeconomics, including house prices, housing affordability, and the likelihood of a property crash. Is there an Australian housing bubble? Will house prices crash, boom or stagnate? Is the Australian property market a pyramid scheme or Ponzi scheme? Can house prices really rise forever? These are the questions we address on Australian Property Forum, the premier real estate site for property bears, bulls, investors, and speculators. Members may also discuss matters related to finance, modern monetary theory (MMT), debt deflation, cryptocurrencies like Bitcoin Ethereum and Ripple, property investing, landlords, tenants, debt consolidation, reverse home equity loans, the housing shortage, negative gearing, capital gains tax, land tax and macro prudential regulation.
Forum Rules:
The main forum may be used to discuss property, politics, economics and finance, precious metals, crypto currency, debt management, generational divides, climate change, sustainability, alternative energy, environmental topics, human rights or social justice issues, and other topics on a case by case basis. Topics unsuitable for the main forum may be discussed in the lounge. You agree you won't use this forum to post material that is illegal, private, defamatory, pornographic, excessively abusive or profane, threatening, or invasive of another forum member's privacy. Don't post NSFW content. Racist or ethnic slurs and homophobic comments aren't tolerated. Accusing forum members of serious crimes is not permitted. Accusations, attacks, abuse or threats, litigious or otherwise, directed against the forum or forum administrators aren't tolerated and will result in immediate suspension of your account for a number of days depending on the severity of the attack. No spamming or advertising in the main forum. Spamming includes repeating the same message over and over again within a short period of time. Don't post ALL CAPS thread titles. The Advertising and Promotion Subforum may be used to promote your Australian property related business or service. Active members of the forum who contribute regularly to main forum discussions may also include a link to their product or service in their signature block. Members are limited to one actively posting account each. A secondary account may be used solely for the purpose of maintaining a blog as long as that account no longer posts in threads. Any member who believes another member has violated these rules may report the offending post using the report button.
Australian Property Forum complies with ASIC Regulatory Guide 162 regarding Internet Discussion Sites. Australian Property Forum is not a provider of financial advice. Australian Property Forum does not in any way endorse the views and opinions of its members, nor does it vouch for for the accuracy or authenticity of their posts. It is not permitted for any Australian Property Forum member to post in the role of a licensed financial advisor or to post as the representative of a financial advisor. It is not permitted for Australian Property Forum members to ask for or offer specific buy, sell or hold recommendations on particular stocks, as a response to a request of this nature may be considered the provision of financial advice.
Views expressed on this forum are not representative of the forum owners. The forum owners are not liable or responsible for comments posted. Information posted does not constitute financial or legal advice. The forum owners accept no liability for information posted, nor for consequences of actions taken on the basis of that information. By visiting or using this forum, members and guests agree to be bound by the Zetaboards Terms of Use.
This site may contain copyright material (i.e. attributed snippets from online news reports), the use of which has not always been specifically authorized by the copyright owner. Such content is posted to advance understanding of environmental, political, human rights, economic, democratic, scientific, and social justice issues. This constitutes 'fair use' of such copyright material as provided for in section 107 of US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed for research and educational purposes only. If you wish to use this material for purposes that go beyond 'fair use', you must obtain permission from the copyright owner. Such material is credited to the true owner or licensee. We will remove from the forum any such material upon the request of the owners of the copyright of said material, as we claim no credit for such material.
Privacy Policy: Australian Property Forum uses third party advertising companies to serve ads when you visit our site. These third party advertising companies may collect and use information about your visits to Australian Property Forum as well as other web sites in order to provide advertisements about goods and services of interest to you. If you would like more information about this practice and to know your choices about not having this information used by these companies, click here: Google Advertising Privacy FAQ
Australian Property Forum is hosted by Zetaboards. Please refer also to the Zetaboards Privacy Policy
