for years I have discovered amazing deals on Ozbargain and finally my conscience has forced me to find a good deal and post (contribute) something to all you good people out there..
Anyone looking to get a home loan.. 5 year fixed of 4.99% is unheard of!! Atleast in the last decade..
I was about to lock into a 3 year at 4.85 (when 5 year rate was 5.6) and now I will wait and hopefully lock in for 5 years for under 5%.
Good luck!
Some info (Thanks @Cluster)
There is a $750 fee for each Rate Lock
Establishment fee: $600.
Monthly loan service fee: $8.
Comparison rate: 5.62%
(Apologies for long post - please feel free to skip!)
Personally I think that fixing interest rates should not be about how much money one can save by not having to pay more interest that one has to. At the end of the day as somebody else has noted the Bank will win when it comes to making money through interest vs you saving money by not paying interest at a higher rate (after all that is the business they are in). Fixing interest rates is more of an insurance policy (ie managing risk) or for security (ie certainty regarding interest payments).
Certainty
As previously mentioned by another poster, if interest rates go up, you have the certainty of the same interest payment (and yes 'saving money' by not paying interest at the higher rate). If it goes down, you are forking over more than the variable interest loan.
Risk
As mentioned I akin fixing interest rates like having car/house insurance - you are hedging against a rise in interest rates by fixing rates, and you are hedging against car being stolen or house burning down. Both you do not want to happen and you don't want to be in that position if it does.
I've fixed my home loan twice, hedging that interest rates would rise (first fixed for 3 years a month before GFC and second 2 years two and a half months ago). The first time around I didn't do any calculations, rates were just going up and up and I 'lost' out when rates dropped dramatically due to GFC. Second time around I did sums, looked at the 1 to 5 year fixed rates at the time (2 year rate was the lowest - which indicated that the bank was anticipating an increase after 2 years), included a worse case scenario that rates would immediately rise after I fixed the rates (assumed 25 point increase in rates per quarter for two years), and fixed 90% of my loan. Even with a 25 point rise per quarter for 2 years, I would be roughly the same as if I had left it on variable, but the aim was to hedge against a rising interest rate.
So, would I fix my interest rates again, despite my previous two predictions of rate rises (more like gut feeling, both incorrect!) that interest rates would rise? Probably, but only after doing some sums :) I might do a split loan again for the home loan and fix 100% of the investment loan.