Interest Rates

[Psilan]

Yes, and have been for 20+ years.
I went back and requested a discount a second time. See what happens.

[Psilan]

I got a discount of 0.04% off the 18M rate.
So bugger all...

[Beano]

I got a discount of 0.04% off the 18M rate.
So bugger all...

But you still got the cash back too ?

[Psilan]

Yes. Cash back still provided.

[Don't believe the Hype]

Yesterday I was informed that ASB will be lowering their serviceability testing level... no confirmation on the new testing level or other banks intentions but if one does it the others are likely to follow.


These testing levels have been a handbrake on many borrowers who have high levels of equity so this might see a rush of funding to those who want to invest but in the recent past have been unable to.

[Perry]

It's a signal the whole economy is going down south.

Disregarding the covid-19 thing, how's Gary's Feb 2018 prediction looking now?
(That's presuming "going down south" means getting worse.)

[Frezzinghot]

**Cashback**

I have 1.5mil worth of new lending I am taking across to SBS, all in new lending, what would a reasonable amount of cash back be for this amount?

The banks broker has asked for an amount, first thought was 100k but then I woke up!

FH

[Frezzinghot]

"When you secure a new mortgage, banks will often pop a chunk of cash into your account – usually between 0.1% and 0.7% of your loan’s value. This is known as mortgage cashback.
You can do whatever you like with this cash but homeowners often spend it on purchase costs, renovations and other property expenses. "

This was taken from the Mortgage Empire website.

[Frezzinghot]

***Float or fix***

Along with the new bank and lending of 1.5mil is the decision to fix or float.

I am erring on the side of floating until we get to at least 2% interest rates, Im sure this is not far away, just wondering what everyone else is up to with new lending.

FH

[Anthonyacat]

Along with the new bank and lending of 1.5mil is the decision to fix or float.

I am erring on the side of floating until we get to at least 2% interest rates, Im sure this is not far away, just wondering what everyone else is up to with new lending.

FH

Do the math. I am fixing as soon as lending comes up for renewal (but waiting until the last day or two).

Math is simple. New 12M fixed rate of say 2.7% vs floating rate of... 4%? On a $1M loan if you float at 4% instead of fixing at 2.7% for 3 months you pay an extra $3,250 (1.3% x 4 months). In order to save more than that in the following 9 months you need the 12M rate to be 2.26% or lower. I personally dont see that happening. But I've made plenty of bad interest rate calls before.

[Anthonyacat]

I am seeing 0.5% and 0.6% a lot at the moment. If you cracked $10k I would be very surprised.

[Frezzinghot]

I am seeing 0.5% and 0.6% a lot at the moment. If you cracked $10k I would be very surprised.

Yes I thought about asking for 10k as its a lot of lending in one hit, see what I come up with. No harm in asking.

[Frezzinghot]

Do the math. I am fixing as soon as lending comes up for renewal (but waiting until the last day or two).

Math is simple. New 12M fixed rate of say 2.7% vs floating rate of... 4%? On a $1M loan if you float at 4% instead of fixing at 2.7% for 3 months you pay an extra $3,250 (1.3% x 4 months). In order to save more than that in the following 9 months you need the 12M rate to be 2.26% or lower. I personally dont see that happening. But I've made plenty of bad interest rate calls before.

Thanks, yes the math tells the real story, what if going to a 6month rate was an option? I will look at this on interest website.

[Anthonyacat]

Thanks, yes the math tells the real story, what if going to a 6month rate was an option? I will look at this on interest website.

Best to do the calculations. But in the end you have no idea what rates will do. Always a chance of a shock and they go up. Not a high chance, but not impossible. I know people locking in 3 and 5 year rates now, for certainty.

Fact is, rates are lower now than anyone has ever seen before. Would you really be upset to be borrowing $1.5M at 2.7% if in 6 months the rates are 2.1%?

Maybe split it into two or three different terms to hedge your bets.

[Frezzinghot]

Have just been offered the following rates for 1.5m of new lending, thoughts???

3.39 6mnths
2.79 1yr
2.79 18mnts
2.69 2yrs
2.99 3yrs
3.09 4yrs
3.19 5yrs

Im thinking some negotiations are needed!