In light of the impending announcement from the reserve bank tomorrow.
Who is sticking with variable and who is going to or has fixed their interest rate???
We are a first home buyer (well bought 6 months ago)and very unsure of what to do. If we fix now for 3 years we pay an extra $100 per week INTEREST on our mortgage. But have peace of mind knowing exactly what our repayments will be.
If we don't fix we have more money in our pockets and are not giving it away to the bank but if the variable goes up to 8% or beyond within the next 3 years we'll be struggling (especially seeing as I want another bub and don't intend to be working fulltime after #2 comes along)
Mara, I generally don't ever fix because the bank usually calculates the fixed interest rate so it still swings in their favour, long term. It also locks you into inflexible payments, no redraws, etc for the entire period. Make sure you check all the fees etc associate with breaking the fixed rate and think about how your circumstances might change during that time.
The exception I think I would make is if rates were getting really high (ie up near 9% mark) and there were signs of an economy blowout brewing like in the late 1980s. We are a *lot* of rate rises away from that right now.
very true Marydean! I just find it all so scary!
Another option I was thinking about was staying variable but making our repayment amounts the same as if it were fixed (ie paying $100 per week extra on top of our current variable amount) that way we'd wack more off our principal and if times got tight we would be ahead and could re-draw if absolutely necessary.
I'm just really hoping that if we did this our variable rate wouldn't go much over 7.5% within the next 3 years (ours is currently 5.39%)
These talks of 0.5% rises and 7 rises over the next 12 months just makes me nervous!
we fixed for security of knowing how much we have to pay, we like to budget and run on a tight budget so we can afford the extras, if we werent fixed yeh we could prob do it all today, but we find saving a better option for us.
we are fixed at 6.9% and are very happy ours runs out in 18 months and we are not sure what to do
but we do have huge fees to pay if we break out early etc
I think there was an article today that said something about it being too late now to fix rates. Currently we pay more into our loan, we are safe to about 8% before we have to worry about finding extra.
When i first enquired with our mortgage broker about fixing about 3 weeks ago the fixed rate for 3 years was 6.99% on a fixed package. Which in my opinion isn't a bad rate.But when I enquired again today it's gone up to 7.39%. Gotta love banks!!!
To fix or not to fix?????????????
what to do . . . what to do . . . .
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