Interest Rates

[Maccachic]

You don't pay a broker they get paid by the Bank (however not all banks work with brokers).

Basically have a look at the rates others on here are getting tell the bank I know x bank is offering this match it, they normally oblige so long as you are reasonable

[mortgage broker]

We help our clients refix and don't charge a fee. Generally we are paid a little to fix with the same bank and get a lot more if we help the client swap banks.

In the current environment most banks will match a rate you get from another bank, the only thing they tend not to match is the cash backs that you get by moving. Slowly the bank are trying to put this worm back in the can but you can generally get anywhere from $3,000 to $4,500 for that type of lending. A lawyer will charge approx $1,000 for switching and usually we tell our clients that it might take up to 5 hours of their time, in dealing with changing things over.

[Davo36]

Hi guys, I'm re-fixing with ASB and have received interest rates to consider today. I asked for these around 3 weeks ago. They said they would get onto it, then when they do I get 4.5 hours to make a decision - and the guy doesn't even answer questions in that time. Man, getting pretty poor treatment this time around.

But my question relates to a paragraph in the offer (which I've asked him to explain), which I don't really get:

Please note that once you have formally advised the Bank of your preferred interest rate option, & the Bank acknowledges acceptance of this instruction, the interest rate chosen will be immediately locked in & will be subject to an Early Repayment Adjustment (ERA) in the event changes are subsequently made to your interest rate.

WTF does that mean? That if I choose an interest rate and they accept it, and interest rates move before the loan comes up (17/19/14) then I might have to pay an early repayment fee?

[Perry]

Changes by what / whom?

[Meehole]

What if they go down before the paper works completed, if you then ask for a lower rate does the ERA apply then?
I've been told not to fix at the moment.

[BigDreamer]

Hi guys, I'm re-fixing with ASB and have received interest rates to consider today. I asked for these around 3 weeks ago. They said they would get onto it, then when they do I get 4.5 hours to make a decision - and the guy doesn't even answer questions in that time. Man, getting pretty poor treatment this time around.

But my question relates to a paragraph in the offer (which I've asked him to explain), which I don't really get:



WTF does that mean? That if I choose an interest rate and they accept it, and interest rates move before the loan comes up (17/19/14) then I might have to pay an early repayment fee?

Ahh strange - I have dealt only with BNZ & ANZ. With both banks, when I negotiate a rate and they accept it I am provided with a Rate Lock document which I have to sign *before* the rate is confirmed.

Just so I understand, you discussed a specific rate with ASB and after 3 weeks they come back with an offer written down with the clause you quoted without requiring any signatures? Sounds very strange.

[Norwest]

Davo, is this related to one of your commercial rentals?

I just got offered new discounted fixed rates from ASB late last week that I locked in on one of my residential rentals - which I accepted - and didn't have anything like this presented to me?

[Wayne]

I think they mean that the rate is locked. If you decide to change it to a better rate before the due date then you pay ERA.
Westpac have a fee if you want to break the lock.

[Davo36]

Ok so I spoke to the guy, even he wasn't sure at first, but basically it means once I choose a rate, I can't then expect to choose another lower one if interest rates go down before the loan is re-fixed - without paying a penalty.

Thanks for the replies.

[Meehole]

Ok so I spoke to the guy, even he wasn't sure at first, but basically it means once I choose a rate, I can't then expect to choose another lower one if interest rates go down before the loan is re-fixed - without paying a penalty.

Thanks for the replies.

Is that a round about way of insinuating that the rates could go down before loan is refixed??

[Davo36]

Davo, is this related to one of your commercial rentals?

I just got offered new discounted fixed rates from ASB late last week that I locked in on one of my residential rentals - which I accepted - and didn't have anything like this presented to me?

It's a small building which has both commercial and residential in it.

Can you say what rates you got offered? I've been offered 5.8% and 5.9% (12 & 24 months) for the residential lending and 6.85% and 7.13%(12 & 24 months) for the commercial.

[Bluekiwi]

It's a small building which has both commercial and residential in it.

Can you say what rates you got offered? I've been offered 5.8% and 5.9% (12 & 24 months) for the residential lending and 6.85% and 7.13%(12 & 24 months) for the commercial.

By the way Davo I think you are turning out more right about interest rates than I was.
Unless we see major leaps.

[Davo36]

Well they are staying lower for longer than most people were saying.

But man, it's a total crap shoot as far as I can see. I've just told the guy to fix for another 2 years, but man, I have no idea if it's the right choice or not.

Is the world going to experience another GFC in that time? Will we have another big earthquake in that 2 years? Will the Chinese property bubble burst? And a million other unanswerable questions!!!

[Eugene]

Well they are staying lower for longer than most people were saying.

But man, it's a total crap shoot as far as I can see. I've just told the guy to fix for another 2 years, but man, I have no idea if it's the right choice or not.

Is the world going to experience another GFC in that time? Will we have another big earthquake in that 2 years? Will the Chinese property bubble burst? And a million other unanswerable questions!!!

These are the right questions to ask IMO.
Interest rates will only continue to rise with all things going well/none of that crap happening.
Your expectations for interest rates should depend on whether or not you think any of these things will happen.
For example I see HSBC offering 5.75% fixed for either one, two or three years. Personally at those rates I would take one year and wait and see.

[Davo36]

Your expectations for interest rates should depend on whether or not you think any of these things will happen.

But there's simply no way to know mate.

For example I see HSBC offering 5.75% fixed for either one, two or three years.

I imagine this is for PPOR, not for investments right?