To fix or not to fix?
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Eh**xpe,rt*I Ies$a
Tofix or not to fix? Fiveexpertssharetheirviewon whetherit'sworthconsidering a fixedinterestratenowor waitfor possiblefurtherreductions.
I wou[dsuggesttockingin a fixed rate now.as I thinkwe're prettycloseto the bottomin terms of rate movements, It'scurrent[ypossib[e to securea three-year fixedloanfor 5.39per cent- comparethat with the [ong-termaverage variablerate of sevenper cent. Evenif rateswere to dropa bit further,and l'm not sure that's[ike[y, you'restit[ we[[ in front. Fixingthe loanon your own homeor your investmentproperty doesn'thaveto be an at[ or nothingexercise. Perhapslookto a sptit loanand fix the rate on hatfthe ba[ance. if you do look However, to a fixedrate,you need to be confidentyou'renot goingto needto break beforethe end of the fixedterm as significant penaltiesappLy.
t# b* Yeac ffimee$ ptril$'ff# *sslfg***'* {* ce**# Er#c ##g$ff
Thereare two key Fixedinterestratesare considerations when currentlyvery attractive, decidingbetweenf ixed with manylenders andvariabterates.Do offeringfixedrateslower you needthe certaintyof t h a nt h e d i s c o u n t e d fixedratesgivenyour variab[erates.However employmentsituationor fixedratessti[[ remain incomeflows?And,are relativetyunpoputar you ableto reduce want becauseAustratians borrowingcostsfrom a home,but not the choosingbetweenfixed, mortgagethat comes variableor some with it. combination of the two? Payingoff the 0ne thingyou certainty mortgageas quicktyas possib[eis what everyone s h o u [ d n 'bt e t h i n k i n g a b o u ti s p u n t i n go n i s f o c u s e do n d o i n ga n d futuremovesin interest it's the variabtehome rates- ctearlyno one loan productthat best knowsthe futurewith offersthe flexible certainty. featuresto achievethis ln the current outcome. environment, f ixedrate With exoectations of loansare indeedworthy furtherofficiaIrate drous of consideration to assist i n t h e c o m i n g1 2 m o n t h s , in keepingrepayment couptedwith the factthat costsdownand providing AustraliansLikethe somecertaintyon ftexibitityto payextraoff incomeflows. their homeloan,it's hard However,as always, to recommendfixingat t h ed e c i s i oo n f h o wm u c h t h i st i m e . to fix is a oersonaI lf a fixedinterestrate decisionbasedon your is a betterfit with your individuaI circumstances. risk profi[e,thenyou'd stiI be on a goodwicket by historicstandardsevenif youwere to hold off untitthe tirst signsof ratesmovingupwards.
tBe* t* #s**kbs9*rs {hs fix**$tsrc?t #tr##f &$s*$$rBfE*#F?t
#$F[H. F*$t*{c$*s PROPERTY INVESTOR 2013 1/.AUSTRALIAN JANUARY
It'sso temptingto see variabteratesaroundsix oer centand fixedrates as low as 5.37per cent . he a n dc o n s i d efri x i n g T long-termfigures indicatethosewho've fixed over the last 20 yearshavebeenbetter off on veryfew occasions. OfficiaIratesare being reduced,as the Reserve Bankof Austratia believesthe economy needsstimutationnoW w h i c hm e a n st h i n g sa r e not at[ rosy.0n the other hand,fixedratesare set by lenderswho lookat what ratesmightdo in the nextyear,two years or three-plusyears. Banksusua[y have more dataon handthen we do.Sowhat to do? lf youwant to se[[ in the timeframeyou're l o o k i n ga t f i x i n g t, h e n don'tfix - the breakcosts coutdbe high.lf youwant to useyour savingsby utitisingan offset account,then a tixedrate i s n ' tf o r y o u . lf you needa bit of peaceof mindthen maybehedgeyour bets, work out what you can savein the nextfew years and addthat to your savingsor offsetaccount and fix what's left over, teavingthe restvariabte.
With three-yearfixed ratesnowsittingatmost point one percentage lowerthan standard variab[erates,it's stirring debatearoundwhether borrowersshou[dfix part o r a t [o f t h e i rh o m el o a n . 0ur customerdata showsan increasing numberof borrowers optingfor fixedrate toans,with demandrising for three consecutive monthsto reach20 oer centof a[[ new loan approvatsin September. It'sverydifficuttto pick the bottomor top of an interest rate cycle,even for the exoerts. With fixedratesat their lowest[eve[since2009, it's certainlyworth investigating this option. Be sureto weighup your optionscarefutlyas fixedloansandvariabte loansbothhaveprosand cons,whichare based aroundtoan f texibil.ity, featuresandcosts.
ffiws *s*stmm#fl #ettr $fuffiw$ #er*nmsxd t* $'##*$E rxs&mg ff# +a*.r *ees *4 *i $ **...69Sd &tr*{E lJp Sts"{{qffW
9*mrt wpprmwm{* Em S*ffi€emfu*r.
WWW.APIMAGAZINE.COM.AU
Eh**xpe,rt*I Ies$a
Tofix or not to fix? Fiveexpertssharetheirviewon whetherit'sworthconsidering a fixedinterestratenowor waitfor possiblefurtherreductions.
I wou[dsuggesttockingin a fixed rate now.as I thinkwe're prettycloseto the bottomin terms of rate movements, It'scurrent[ypossib[e to securea three-year fixedloanfor 5.39per cent- comparethat with the [ong-termaverage variablerate of sevenper cent. Evenif rateswere to dropa bit further,and l'm not sure that's[ike[y, you'restit[ we[[ in front. Fixingthe loanon your own homeor your investmentproperty doesn'thaveto be an at[ or nothingexercise. Perhapslookto a sptit loanand fix the rate on hatfthe ba[ance. if you do look However, to a fixedrate,you need to be confidentyou'renot goingto needto break beforethe end of the fixedterm as significant penaltiesappLy.
t# b* Yeac ffimee$ ptril$'ff# *sslfg***'* {* ce**# Er#c ##g$ff
Thereare two key Fixedinterestratesare considerations when currentlyvery attractive, decidingbetweenf ixed with manylenders andvariabterates.Do offeringfixedrateslower you needthe certaintyof t h a nt h e d i s c o u n t e d fixedratesgivenyour variab[erates.However employmentsituationor fixedratessti[[ remain incomeflows?And,are relativetyunpoputar you ableto reduce want becauseAustratians borrowingcostsfrom a home,but not the choosingbetweenfixed, mortgagethat comes variableor some with it. combination of the two? Payingoff the 0ne thingyou certainty mortgageas quicktyas possib[eis what everyone s h o u [ d n 'bt e t h i n k i n g a b o u ti s p u n t i n go n i s f o c u s e do n d o i n ga n d futuremovesin interest it's the variabtehome rates- ctearlyno one loan productthat best knowsthe futurewith offersthe flexible certainty. featuresto achievethis ln the current outcome. environment, f ixedrate With exoectations of loansare indeedworthy furtherofficiaIrate drous of consideration to assist i n t h e c o m i n g1 2 m o n t h s , in keepingrepayment couptedwith the factthat costsdownand providing AustraliansLikethe somecertaintyon ftexibitityto payextraoff incomeflows. their homeloan,it's hard However,as always, to recommendfixingat t h ed e c i s i oo n f h o wm u c h t h i st i m e . to fix is a oersonaI lf a fixedinterestrate decisionbasedon your is a betterfit with your individuaI circumstances. risk profi[e,thenyou'd stiI be on a goodwicket by historicstandardsevenif youwere to hold off untitthe tirst signsof ratesmovingupwards.
tBe* t* #s**kbs9*rs {hs fix**$tsrc?t #tr##f &$s*$$rBfE*#F?t
#$F[H. F*$t*{c$*s PROPERTY INVESTOR 2013 1/.AUSTRALIAN JANUARY
It'sso temptingto see variabteratesaroundsix oer centand fixedrates as low as 5.37per cent . he a n dc o n s i d efri x i n g T long-termfigures indicatethosewho've fixed over the last 20 yearshavebeenbetter off on veryfew occasions. OfficiaIratesare being reduced,as the Reserve Bankof Austratia believesthe economy needsstimutationnoW w h i c hm e a n st h i n g sa r e not at[ rosy.0n the other hand,fixedratesare set by lenderswho lookat what ratesmightdo in the nextyear,two years or three-plusyears. Banksusua[y have more dataon handthen we do.Sowhat to do? lf youwant to se[[ in the timeframeyou're l o o k i n ga t f i x i n g t, h e n don'tfix - the breakcosts coutdbe high.lf youwant to useyour savingsby utitisingan offset account,then a tixedrate i s n ' tf o r y o u . lf you needa bit of peaceof mindthen maybehedgeyour bets, work out what you can savein the nextfew years and addthat to your savingsor offsetaccount and fix what's left over, teavingthe restvariabte.
With three-yearfixed ratesnowsittingatmost point one percentage lowerthan standard variab[erates,it's stirring debatearoundwhether borrowersshou[dfix part o r a t [o f t h e i rh o m el o a n . 0ur customerdata showsan increasing numberof borrowers optingfor fixedrate toans,with demandrising for three consecutive monthsto reach20 oer centof a[[ new loan approvatsin September. It'sverydifficuttto pick the bottomor top of an interest rate cycle,even for the exoerts. With fixedratesat their lowest[eve[since2009, it's certainlyworth investigating this option. Be sureto weighup your optionscarefutlyas fixedloansandvariabte loansbothhaveprosand cons,whichare based aroundtoan f texibil.ity, featuresandcosts.
ffiws *s*stmm#fl #ettr $fuffiw$ #er*nmsxd t* $'##*$E rxs&mg ff# +a*.r *ees *4 *i $ **...69Sd &tr*{E lJp Sts"{{qffW
9*mrt wpprmwm{* Em S*ffi€emfu*r.
WWW.APIMAGAZINE.COM.AU
