DH wants to break our fixed rate loan home loan...Can anyone give me advice?

[MrsFabuloso]

I so don't know much about how the stock market works and how it affects the home loan rates etc... But DH has proposed to me that we break our fixed home loan and take a chance on having the variable rate for a while and hope that the rates go down again so we could fix it again at a lower rate. Now I get all of that (well mostly!) and to break our loan agreements now and have the fixed rate we will be saving money. If the variable rates stay the same or go down, we will save a significant amount of money. But there's no guarentee that the rates won't go up. Then it will be a waste of time and money paying out our loan breakage costs and having a higher lown rate, we will lose money.
Now from my extremely basic understandings of the whole stock market and the way it affects loan rates and what ever...I understand that there was some sort of disaster in the stock market recently and it's possible that the exchange rates will be going down because of it, causing loan rates to drop, am I right? So if we were to break our loan right now, we could potentially be doing an intellegent thing and be saving ourselves money in the long run, right?
If you understand all of it better than I do, do you think it would be an intellegent gamble to take in paying thousands in breakage costs, to potentially save some money on our home loan? I;m sooo confused!!

[nickle730]

It really depends on how high you fixed your rate at and for what term? The variable rate is expected to go up agin this year. Most 'experts' are expecting rates to be raised this year by a total of 0.5-1%. Having said that, even the 'experts' don't have a crystal ball! Have you checked how much you would have to pay to break your fixed rate contract? It is usually a LOT of money and you are often better to wait out your contract. Again, it depends on what rate you fixed your loan at and how long you fixed it for. Good luck!

[FabFiona]

It's worth doing the math. The break fees can be quite high.

A colleague of mine did the math and worked out that variable interest rates would have to be lower on average than they are now for the amount he would save every week to add up to what he would pay in the break fee over the next 20 years. For him it wasn't worth it.

I suspect that whilst it seems like a good idea on paper it works out roughly the same.