Another rise – we may have a break from rises for a few months as retailer (especially of whitegoods and furniture) are having poor sales figures. But i believe that the rate rises will continue soon enough, barring an unexpected shock.
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I think this will lead to a fall in the interest rates of fixed loans, or will mean no increase in what is being offered for a while. I still think variable rates will go up another half a percent in the next four months. I have updated my main post It helps to have a framework for comparing different loans. Using the AAPR or comparison rate can be less than helpful as it does not contain some of the most serious fees, so while it is a good effort, if you don’t facotr in what fees it includes, and does not include, it can be misleading. It would be more helpful if they followed my framework in my overly humble opinion (I acknowledge that this could only be done based on a specific scenario). So here is my framework that you can use as an additional input to the comparison rate. Have you caught every cost associated with a new home loan? Check out the following categories and sub-categories of expenses There are two main types of 100% offset loans. The difference lies in where the interest on the savings account goes, either into the loan account, or to the savings account. (an additional pedantic point is that if it goes into a loan account with redraw, some lenders will allow you to redraw the offset interest, other lenders will not.) You might call the different types loan credit 100% offset or savings credit 100% offset. Excuse me if I state the obvious here! There are times when a fixed rate home loan can provide some certainty over a period of extra financial or emotional stress. Interest rates can move further than you expect. It may be worth considering fixing a significant part of your borrowings in the following circumstances: Many errors were made from about Jan 02 to Dec 04 with staying variable, and from about Jan 07 to June 08 with people fixing for long terms. You can see on the charts that from Jan 07 to June 08 there was not much pressure for rates to go up further. However in Jan 02 to December 04 there was significant upward pressure on rates. This indicator could have assisted many borrowers at these times, to make a better decision on whether to fix or not. I wish I had a crystal ball, as it is possible that the US could respond to their problems in 2012 by printing money to “inflate” out of trouble. However I believe that the US still has plenty of borrowing power left and will not need to go down this path (The UK and Japan may be another matter). Well – the usual situation is that nobody guesses what will happen . . . |
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