I am just thinking about what everyone’s plan about their home loan. Is it good time to fix the rates & what should be the good period to fix I.e. 2 yr, 3 yr, 4 yr or 5 yr. If you can shade the light on your preferred rate to fix at this time. Thanks in advance..
Good Time To Fix Home Loan
kt007 on 05/03/2021 - 12:15
Comments
How long is a piece of string.
Maybe
There are a lot of ways to skin a cat.
Well as everyone said, it depends. It depends on certainty of your income, do you like the home, are to looking to move to a bigger/smaller place. Fixed rates are at a really good spot now. About 1.99% fixed for 4 years with big four banks is good. You can get even lower rates with tier 2 banks. Maybe ask some questions to yourself first. Possibly you are in the best position to answer this question for yourself.
Hey there, thanks for this reply. Honestly, I wonder the same question. I'm currently on variable with a big 4 at 2.99% variable. I know fixed is currently 1.99% and I don't see it dipping much lower than that.
I don't quite understand why not everyone would go into fixed though, can you elaborate on the points you mentioned in your comment? The only downside I can see with fixed is the fact that maybe interest rates will dip even further? But, aside from that, what other implications are there for fixing a home loan rate?
I fixed last year at 2.22% should have waited a bit longer but that's the risk you take. Some lenders don't offer an offset account with a fixed rate so that's something to consider.
You can't move banks or sell the property without paying break fees. I intend to refinance every year to take advantage of the $4k cashbacks whicb offsets the slightly higher cost of variable.
Offset is also generally not available.
Honestly, I would if I could. We are constructing now. I can only consider any change after the construction phase is completed. Best to send me a pm, and happy to chat with you offline.
Fixed rates were popular posts on OzB around 12 months ago, so I fixed half my loan for 3 years. Then the rate went even lower. I'm still satisfied with fixing half the loan because the rates are very good. With official rates at 0.1%, it doesn't have much lower to go. I would be surprised if rates went negative and shocked if they went significantly negative. Without the RBA reducing rates or government incentives, I would be mortified if the big banks reduced the rates at all.
So, disclaimer - I am not an accountant and definitely not an expert on the topic and you should get your own professional advice - yes, I think it's a great time to fix part or even all of your home loan. This is for PPOR loans, not investments. No idea what's good there.
The downside to fixing your entire home loan is not having an offset account for those who have extra income. It is a mathematical balance between the savings of an offset account vs the lower interest charges of the fixed rate.
There are two banks that now offer full offset with fixed rates:
Bendigo Bank 2.09%1 year https://www.bendigobank.com.au/personal/home-loans/complete-…
ANZ 2.19% for 1 year https://www.anz.com.au/personal/home-loans/compare-home-loan…
Depends on your circumstances but the above two are pretty decent.
Yes. Good time to fix.
<2% fixed is a good rate however I doubt the RBA will lift rates anytime soon. The economy, whilst the government is saying it is doing well, is still fragile. Wages are stagnant, housing costs are increasing, cost to maintain private health insurance is soaring around 25% right about now plus the rebate is getting less. All it takes is one or two cases of Covid, a 2nd, 3rd, 4th, different strain, ineffective vaccine, etc and we panic and shut things down
It depends.