Floating for 3 months, or fix for 1 year and break at 3 months?

[newbyvest85]

Hello, wanted to hear your thoughts on this matter.

I have about $250k, with a fixed rate of 4.19% coming to an end soon. Following that, I anticipate I may sell the property in 3 months.

Having discussed with the bank, I am able to obtain a 5.2% floating rate. This will equate to a $70 more in payments per fortnight.

I was mulling through things, and wondered - given that the wholesale rate is likely to edge higher, is it actually wise idea to still fix it again for 1 year, say 4.29%, and then at 3 months, break it?

Or will I most likely be in a worse situation, if I were to fix it now?

Thanks for your advice.

[JBM]

IMHO

First, make up your mind if you're going to sell it or not ..?

Then what is your selling expectations ...are you happy to get whatever the market will pay currently aka auction/deadline sale (what has sold recently in your area ?)... if so go floating

Or are you fixed on a higher price than recent sales and willing to hold for sometime to hopefully get it >> if so FIX 6months even if it sells most purchasers take time to settle.

[newbyvest85]

IMHO

First, make up your mind if you're going to sell it or not ..?

Then what is your selling expectations ...are you happy to get whatever the market will pay currently aka auction/deadline sale (what has sold recently in your area ?)... if so go floating

Or are you fixed on a higher price than recent sales and willing to hold for sometime to hopefully get it >> if so FIX 6months even if it sells most purchasers take time to settle.

Thank you JBM.

The 'selling' part of me is not actually the truth, it is actually a refinancing, which unfortunately I cannot do until one thing is done - and that one thing is out of my control.

I really am interested in understanding, given the current climate that wholesale funding prices are on the rise, does it make sense to fix-and-break, rather than go floating. An Early Repayment Charge only applies when Wholesale funding drops. Given that for the past few months, banks have been consistently offering 4.29% for 1 year, and the global climate means increasing wholesale rates, I wonder is it a shrewd move to go for a 1-year term despite not intending to remain for the whole year.

[GLin]

Fix for 6 months then.

[bob kane1]

I really am interested in understanding, given the current climate that wholesale funding prices are on the rise, does it make sense to fix-and-break, rather than go floating.... <snipped>....and the global climate means increasing wholesale rates, I wonder is it a shrewd move to go for a 1-year term despite not intending to remain for the whole year.

If you have a guarantee from someone that wholesale rates will rise then you can act shrewdly as the guarantor will pay for any loss that you may suffer.
If you don't have a guarantee that wholesale rates will rise then don't complain if your shrewd move costs you money.
Please note that every prediction about future wholesale rates for the last 10 years has been wrong.
Why would you bet that this prediction will be correct?

[brokerman]

Fix for 6 months then.

This! 100% agree