Aug 7 2009, 11:50 AM
Currently on variable, bank is increasing fixed rates and i am unsure whether i should stay on a variable rate of 5.04% or fix my home loan with the rates starting at 6%
What do you guys think would be best??
Aug 7 2009, 11:54 AM
Ive heard that bank rates are going to be going up at the end of the year, early next year? If it were me, I would wait and see when "word' gets out that they are rising much more, and then I would think about fixing.
Maybe split the loan and fix part of?
Aug 7 2009, 06:10 PM
We are in the same situation and are currently speaking to our broker about it. When I hear back from him, I will let you know what he suggested for us. It might not be the same advice for you but might give you some more info.
Aug 7 2009, 07:14 PM
I recommend to my clients that if they are on a tight budget or like to know how much they need to pay on their loan repayments, then going to a fixed rate is the right way to go for them. Once you go fixed, you have to make sure you take no notice of variable rates or you could go nuts comparing what you would be paying/saving if you had stayed variable. Fixing rates is very speculative, so I never recommend clients go fixed if they are trying to "beat the market". Long term studies have shown that fixed and variable tend to cost the same over a 5 year period.
If you are going to go fixed, consider how long you wish to go fixed and if your life may change during that time, i.e. if you fix your entire loan but wish to increase the loan amount for extensions or other expenses, you will incur exit fees on the loan if you need those funds before the fixed term expires.
Lastly, if you are looking to fix now, you should find out about a rate lock. It is a fee you pay at application which ensures that you are offered the fixed rate quoted at the date of application. If you don't rate lock and interest rates increase between the date of application and the date the loan settles, you are locked into the higher new rate.