Which rates option would you go with???

[kiwiinoz]

just been sent my options for rates , but not sure what to go with??? i dont plan on paying off heaps on this house so i guess that counts out flexi??

what would you go with?? and this is probably a real dumb question( who said theres no such thing as a dumb question??) but say i go with the two years
at 5.14% what happens after that two years?? what happens then??



This is what i can offer 1 year - 5.20%
2 years - 5.14%
3 years - 5.65%
4 years - 5.95%
Floating - 5.49%
Flexi - 5.60%
$1000 Cashback
$1000 Legals


thanks guys, learning heaps from here

[Dunning]

A lot depends on what else is going on in your life.
Do you have spare money that you can pay in?
Are you expecting extra money(bonuses, gifts etc)?
Do you want certainty for a length of time and how does that play against your aceptance of risk?
How hands on do you want to be?

[donna]

After the 2 years if you have not taken any action to renew it on another fixed loan - it goes on a variable rate - that's been my experience.

[kiwiinoz]

hey Dunning,i dont want to put more money in, as its pretty well postivily geared, and all spare money will go towards a deposit for the
next investment property.
I spose with it being positivly geared i can take a risk witht he time thing, so maybe getting the two year% might be the go.?
As for how hands on do you want it to be??? not sure what you mean??
thanks

[NovInvestor]

Bargain hard and get at least 4.99%@2 years!

[Ahar]

kiwiinoz....what is really needed is a crystal ball

If you find one, let me know....I'm after one myself

As for your problem...the only way to resolve this issue is to go with the option you find least unacceptable

.....or should that be the option that is the most palatable?

Then live with your choice

IMHO there is no point in trying to second guess the market....even the so called experts can't get it right

[SleepyTiger]

Bargain hard and get at least 4.99%@2 years!

Lol, I agree with NI.

Sounds like you with ANZ/National. get lower rates. Although 2K cash is quite good.

[Rosco]

Spread your risk is a good option. Ie the ol saying don't put all your eggs in one basket.

1) conservative approach. Split loans into three
- 1/3rd short term, maybe 2 year fixed as this is your best rate. This is normally 1 year fixed at round 4.85%, but from your figures is 2! Year
- 1/3rd medium, maybe 3 year
- 1/3rd long term, maybe 5 year which isn't on your list, at around 5.99%

2) more aggressive would be 2/3rds short term and 1/3rd long term

3) really aggressive all short term, but wh if rates jump over next 2 years?

Ross

[Craig Pope Mortgages]

In my opinion it's all about lots of small decisions over a long period of time, sometimes rates will go up after you fix, sometimes they go down. One thing to consider is are current interest rates historically low? If the answer is yes, then whilst 5.95% for 4 years (or even 5.99 for 5 years) may seem alot higher than the current 2 year rate, is this a good low rate to be locking in long term? Will you in 2 years time be wishing you had locked in longer at this point of time? A few years ago when rates were up around 9-10% many people were thinking back to when rates were around 6% at the start of the property boom and thinking how good it was to have interest rates that low.
Personally I have a mixture of 2, 3 and 4 year rates so as Rosco mentioned a mixture of periods gives you the best of both worlds.

[drelly]

I'm sticking with floating. The US are printing more money. This will devalue their dollar more and drive ours up. If anything, rates will come down further. It's going to take a long time yet before we see any real price inflation overseas or here.

[Rosco]

I'm sticking with floating. The US are printing more money. This will devalue their dollar more and drive ours up. If anything, rates will come down further. It's going to take a long time yet before we see any real price inflation overseas or here.

Is your floating rate 4.85% or better?

If not, why float when you could fix short term at a cheaper rate.

For example standard floating on ANZ is 5.74%, whereas 1 year fixed is 5.45%. This is only a 0.29% difference, but if you are borrowing $1 million thats $2,900 interest saved for the year.

I personally don't think rates will go down, and if they do probably only a very small amount. But even if I'm wrong, you are only fixing for 1 year, and chances are over that whole year you would get a lower interest rate.

I think being all floating or all short term is a bit risky, and I wouldn't suggest this strategy.

Ross

[LondonKiwi]

I was with the NBNZ and on floating at 5.24% which was .50% less than the "advertised" rate, once you have a history with a Bank you can ask for discounts. Or better yet get a good broker and they will do all of that for you!
With the rate war that’s kicked off again I’ve fixed the only one that I had on floating at 4.95% for 12 months.

Can’t really see them getting any lower than that in the next 12 months and its good to be able to take advantage of the cut while you can

LK

[Maccachic]

You don't even need a broker just ask and ye shall recieve To be honest I have actually enjoyed beating up banks, all thanks to people's stories on this website. Cheers!!

[Learning]

We have just broken our 5 year mortgage and refixed for one year. It did cost us a fair bit in break fees and it's a gamble that rates wont go up by much, if any, in the next year and a half but I feel I've done my homework. I'm not an economist and I'm sure there will be a few variables I've forgotten but all the signs on the horizon, that I can see, are for rates to stay low.

Europe isn't going to get better any time soon. If Europe starts to fail the US will be next as it's their money that Europe has lost.

The last time the worlds economies were this bad it took a world war to break out of it. Investing in weapons, technology and killing off your excess work force.

Every country who has a few spare dollars or has been printing some extra (Like Europe and the US) are investing in the "safer" options like Aus and NZ. That inflates our currency slowing our exports even more.

And finally we are approaching the the tipping point for an aged population. With less workers paying for more "retiries" the government has to spend more on health, etc and less on economic stimulus but also as you approach retirement you stop spending money on the wants and start saving for the needs. That doesn't help with economic growth either.

Unless anything changes here in the next few years it would be economic suicide to raise rates by anything more than token droplets. Japan's interest rates have been very low for almost 20 years so they can last.

Again, I'm NOT an economist and I'm sure there are many things I've missed so DON'T gamble your house on my word!

[phillip30]

agree with Ross several terms can be useful. Floating also has the advantage of not being locked in so you can avoid breaking fees etc.

cheers


Phillip