Homeloan Interest Rates.

[gazgolf1]

After those pricks at the CBA decided to bump their variable interest rate last week my thoughts have turned to fixing.
Anyone else?

[Minor_Threat]

Yeah was discussing it with the missus after the CBA did that.. Will probably fix very soon!

[Grunt]

Aren't the fixed rates going up faster? From all I have heard fixing is no better at the moment. Maybe I have got it all wrong though.

[AlexMc]

You probably needed to do that 6 months ago if you wanted 3 years or longer...1 and 2 years are still pretty good - but get in this week.

And yes...I work for the CBA...and yes on the face of it the rate rise seems a little harsh...however the CBA has been under the other Big 4's variable rate for a while now and the cost of funding has continued to rise...it was only a matter of time and they were in a no-win situation either way (whether they passed no cut like the NAB did last RBA cut, or didn't pass on as much previously like WBC or ANZ, or be the first to increase like they have had to this week).

Preparing myself for flaming...

[Coffs_Hacker]

I can see how and why they do it. Making 3.85 billion dollars profit is really bad compared to 3.9 billion.

[Grunt]

It has come out today that the margins on loans is starting to rise once more. Guess they are going for 4 billion this year.

[Peter]

4bn isn't that much when your retail home loan book is >180bn and your overall lending book is about 360bn. How much profit should they be making?

The increasing margins should be a reflection of the increased perception of risk in the lending book, but in reality it probably just reflects reduced levels of competition.

What area do you work in Alex?

[Minor_Threat]

I think I'm going to wait until the next RBA meeting before I make a call.. I will definitely be splitting my loan across fixed and variable, just not sure of the split yet?

I missed ING fixed rate rise somehow?

1 Year Fixed Rate 4.99
2 Year Fixed Rate 5.69
3 Year Fixed Rate 6.29
4 Year Fixed Rate 6.89
5 Year Fixed Rate 7.09

[AlexMc]

I'm in Business Banking - fixed rates have been going up for the last 6 months or so. If I was fixing in now I would consider the following:

* Future plans - what are you planning on doing over the term of the fixed rate? Will you want to do anything like sell your house, purchase anything you would want to finance in the way of equity from your house?

* How much can you repay off your mortgage over the term of the fixed rate? If your ambition is to get rid of your mortgage don't leave your variable portion too small so you are stuck making minimum repayments during the remainder of your fixed portion.

The majority of people I see splitting loans don't think it through properly.

As for profit...I agree with the questions of "how much is too much"...however I am also glad I work for an organisation who has the balls to make the hard decisions in the interests of stability. The Bank doesn't win either way...

[markTHEblake]

After those pricks at the CBA decided to bump their variable interest rate last week my thoughts have turned to fixing.
Anyone else?

well they put their fixed rates up by about 0.5% at the same time, and its about the 3rd or 4th iteration of fixed rate increases. You should have thought about fixed rates when they were going down :)

my 3yr fixed rate expired a couple weeks ago, 2 days after ANZ increased theirs. :neutral: It is a tough decision to fix again when the 3 yrs rate is 1.2% above the variable. Heart says one thing, head says another, and both keep changing their mind.

[BrisVegas]

My 2cents worth would be that fixing an interest rate is about far more than just the rate. It's as much to do with personal circumstances as anything.

If you know for certain you are not going to break the loan, sell the house, lose an income etc etc, then a fixed rate is an option. We did it when we started to have kids and knew we'd be on relatively low income for a few years. We needed to know that we could make the payments on one income.

I haven't really watched the rates over the 4 years we've been fixed at 6.85%, but I think we were ahead for a fair while and recently behind the variable rates. Overall, it's probably evened out. The one thing I am certain of is that if we'd have been on variable when rates were nudging 9% we'd have been in a lot of trouble with just income.

[markTHEblake]

This article is still relevant even though written before the subprime crisis, and even more so with fix rates skyrocketing towards 7.0%
http://www.ozgolf.net/forums/showpost.php?p=284020&postcount=279

NAB also lifted fixed rates today by about .50%, only ANZ left out of the 4, although they did a smaller increase two weeks ago. If i was a betting man, they will announce an rate increase tomorrow, effective wednesday.

Am positive those bastards collude.