So what if OCR goes from 3.0 to 2.0 ?

[Bluekiwi]

The OCR is not a factor anymore in banks 5 years rates is it ?

So the proposed reduction over this year from 2.0 to 3.0 wont do anthing ?

As banks have reached a margin level that no reductions will be passed on, and on the other side of the coin the cost of the banks sourcing funds internationally is at an ever increasing premium.

Fair assumption ?

Note: I have my home loan expiring Jan 2010 and its just at that annoying time frame that its a little too far away to easily break and incur the fee, but its risky enough that by Dec 2009 rates could be anywhere ??????????

[Dean@Massiveaction]

Rumour is that banks simply can't borrow long term money from anywhere so they are paying huge premiums for it.
Short term money could stay low and drop further so that will be affected by the OCR.

[starlyte]

im gonna start crying soon!
our fixed rate does not expire till 1st August...

i really wanted a long term rate then... granted they are still lower then what we are fixed at now... but they are climbing... and i dont like it

[Bluekiwi]

I like what the "Sacred Cow" had to say

p.s. 12 months ago when the broker said to me what term do you want I made such a flippant decision, something like "okay 12 months should do, oh no lets make it 18 months so when I come to refix rates should hopefully be down by then" - that was a minimum 7k moment

To quote from Lord of the Rings: "The world has changed"

[foxinthehenhouse]

"Sacred Cow"

Now doubt your post will be deleted. There is one name you can not mention.

The fox is curious - when you say rumor do you mean you where somewhere with some bankers who were involved in the long term funding market and they were discussing it.

If anyone else tried this they would be asked this question.

[David_W]

If the OCR goes to 2.0% from its current 3.0% then the banks are likely to pass on around two-thirds (0.65%) of this via their floating rates, and short term interest rates (eg. ANZ's 3 month rate, 6 month and 1 year rates will similarly drop).

However from discussing with a colleague in a senior position at the Commonwealth Bank of Australia (ASB's parent company), and from discussing with my business bank manager, the long term interest rates are on the up because it is difficult for them to borrow money.

The closest trends we have to predict the 2 year, 3 year and 5 year interest rates come from the US Government Stock Yields. Go to rather early 90s looking US Federal Reserve website and you will see that the yields (interest raids paid out on) 2, 3, 5, 7 and indeed 10 year US Government Treasury Constant Maturities are rising by the day:

http://www.federalreserve.gov/releases/h15/update/

If you were thinking about fixing I would advise you try to sweet talk your banker into thinking it was yesterday, sign a rate lock agreement, and fix now. With the US government printing money we are in for some hyperinflation - so fixing for long periods (at good rates) hedges the impact on this.

Interestingly I predict that short term interest rates, particularly the floating rate will stay low for a little while yet.

[foxinthehenhouse]

However from discussing with a colleague in a senior position at the Commonwealth Bank of Australia (ASB's parent company), and from discussing with my business bank manager, the long term interest rates are on the up because it is difficult for them to borrow money.

Thanks. Refreshing.

[Bluekiwi]

If the OCR goes to 2.0% from its current 3.0% then the banks are likely to pass on around two-thirds (0.65%) of this via their floating rates, and short term interest rates (eg. ANZ's 3 month rate, 6 month and 1 year rates will similarly drop).

However from discussing with a colleague in a senior position at the Commonwealth Bank of Australia (ASB's parent company), and from discussing with my business bank manager, the long term interest rates are on the up because it is difficult for them to borrow money.

The closest trends we have to predict the 2 year, 3 year and 5 year interest rates come from the US Government Stock Yields. Go to rather early 90s looking US Federal Reserve website and you will see that the yields (interest raids paid out on) 2, 3, 5, 7 and indeed 10 year US Government Treasury Constant Maturities are rising by the day:

http://www.federalreserve.gov/releases/h15/update/

If you were thinking about fixing I would advise you try to sweet talk your banker into thinking it was yesterday, sign a rate lock agreement, and fix now. With the US government printing money we are in for some hyperinflation - so fixing for long periods (at good rates) hedges the impact on this.

Interestingly I predict that short term interest rates, particularly the floating rate will stay low for a little while yet.

Nice of the banks to put short term rates down so they can sting us on break fee's

So you think I should even break on something as far out as January ?

[k1w1]

So if I want to put my savings on long-term Term Investment, the banks should give me a higher rate, I guess.

[drelly]

BlueKiwi it depends on what rate you were on and what bank you're with as well as your ideas on where rates are going. There are only two things to work out to allow you to make a decision.

1. The cost of breaking and refixing now.
2. Your estimate of the cost of not breaking and refixing at potentially higher rates later on.