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fixed or variable, whats your say

Discussion in 'Finance & Banking' started by jason626, 8th Aug, 2009.

  1. jason626

    jason626 Member

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    16th Jan, 2009
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    Location:
    moe(melbourne),vic
    with interest rates at there lowest in some five decades and not likely to get any lower and with confidence in the econemy picking up is now a good time to fix bank loans for say 5 -7 years. Whats your thoughts ? :confused:
     
  2. davo6253

    davo6253 Well-Known Member

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    11th Jul, 2008
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    Location:
    Melbourne, Victoria
    Depends on why you want to fix (and if its a ppor or investment loan). However fixed rates are not that low anymore, around 7% for 5 yrs. Imho you would be better off dumping all the money you can into your loan / offset with the low variable then if rates go up substantially you will have less money owing which will offset the higher rate.

    Cheers,
    David
     
  3. AsxBroker

    AsxBroker Well-Known Member

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    Location:
    Sydney, NSW
    I agree with Davo.
    The banks have already increased their fixed rates which are based on the market. Variable rates are more aligned to what the RBA does (note "more" and not "in line" as the banks don't always pass the exact amount on to the consumers). The longer term eg, 5 year rate, doesn't seem to move that much anyway (it didn't drop by 4.25% did it?).

    Cheers,

    Dan
     
  4. Billv

    Billv Getting there

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    Sydney, NSW
    I tend to agree with the other posters

    There is no easy answer but considering the rippof fixed rates I'd stay variable

    It's up to you ofcourse and it would also depend on your circumstances, if you are getting a new loan or refinancing, your current variable rate, how long you want to fix for, your long term goals etc etc
     
  5. Chris C

    Chris C Well-Known Member

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    If your worried about which to choose you could always split the loan and go 50% fixed and 50% variable (or whatever other percentage you wanted). This would protect you against rising rates but still give you the option to have an offset account attached to your variable loan.
     
  6. jason626

    jason626 Member

    Joined:
    16th Jan, 2009
    Posts:
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    Location:
    moe(melbourne),vic
    thanks for the replys everyone i was thinking of fixing my couple of Ip loans a couple of months back but it sounds like it woulden't be worth it now all of my loans are tax deductible, the only problem i have with paying a large chunk of my loans is that i would be using up my capital which i could use for other investments in the future, ie deposits for investments i guess i could use some of my equity i have, however i understand your point of view, and the split loan sounds like a good idea chris c.