TL;DR - Should I fix now or take a punt rates will go lower through NAB in the near-future.
I have a P&I Owner Occupier loan through NAB, house value ~1.5m and loan owing 1.176m (LVR 78%) but have a lump sum in offset - meaning my net balance owing is $1,000,000.
I am currently variable paying 2.87% which was negotiated by my broker back in Feb.
NAB is currently advertising 2.19% fixed for 2 years. Their 1 year fixed is 2.29 and 3 year fixed is 2.29 as well; but the 2 year is the lowest. I can't really get any lower variable from them, maybe 0.1% if I beg them and threaten to leave.
I already pay them a $395 fee p.a. for my existing package so believe I can change to fixed without any new fees. I will save interest rate of 0.68%. On $1m this will save me $6,800 in interest a year. My repayment should go down about $100 a week. This is a substantial saving for me as my income is lower than previous, but equally I don't want to make a bad decision or save a few pennies if it means further future angst.
Is it a no-brainer to fix? Should I hold off and see what the economy is doing further?
I don't fully understand this, my broker tried to explain it to me - but the banks are accessing RBAs term funding facility giving them 0.25% for 3 year funding? So the govt is pumping money into the finance market and based on this, we are unlikely to see fixed rates go any lower, as there is no more margins to drop.
Further note: no need to suggest other lenders, I am 100% trapped with NAB. Due to a big drop in income and no longer having this property as an investment (recently switched to owner occupier) so rent is no longer taken into account, I now fail servicability everywhere in the amount of finance I need, so I cannot change lenders. Makes the choices simple, either stick with NAB variable or NAB fixed.
If I do go fixed, I do plan to do a split loan, so I can keep a portion variable to use the 100% offset, just in case I can get further ahead.