What's better: Fixed rate or variable rate home loan?

vintage123 said :

Ezy said :

vintage123 said :

Ezy said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Interesting, and thank you for the explanation – but given the information you are getting, the only people that would see this as a 650k block are those developer types. General Joe Public (me) look at this as and compare it to a similar house that sold in this street a few months back for 505k. To be honest, I haven’t seen many houses jump in value significantly over the last few weeks. If anything, they are the same as a few months ago.

The problem for me at this stage is lack of homes that offers good bang for buck renovation/extension potential. This particular home for me isn’t one I am interested in due to the way the house is skewed on the block. I have already sketched out a few extension ideas and what I had in mind wouldn’t be achievable due the building encroaching 1.5 metres from the boundary.

http://www.realestate.com.au/property-house-act-weston-120042137

Thats a different kettle of fish all together though – That house sold for 599k two years ago. The reason it fetched that 625k is because it was in an elevated position in Weston and on a nicer street. These houses always fetch a higher price than those down a few streets like the one we are discussing.

More recently, two houses sold on Sturges street. One for 440k! It was back in May and before some more information was released RE: Mr Fluffy, but I am seeing this from someone who is not too privy to what developers are doing behind the scenes.
http://www.realestate.com.au/property-house-act-weston-119620311
http://www.ozpropertyview.com/property-view/ACT/1386663844/9-Sturgess-Place-ACT/

My opinion – this house will go for around the 530 mark. Happy to eat my words, and have an ‘I told you so’ written to me, but I am just going on what I have learned in the 8 months of looking for property in this area. If it goes for the price you are saying, kudos to you – and ‘holy shit I better get my ass into gear’ to me.

Ezy, mate if you can get it for 530k then grab it. Dont overthink extensions or renovations, at the end of the day the land size in Weston will ultimately determine the value of homes. The other thing is if you buy one and overcapitalise through extensions or renos, your just throwing money away.

The only way i have seen people make money on renos, is if they are tradies, or they have family that are, or they convert a garage to a room etc. If you have to apply to council and get the tradies in, the cost are likely to be so high, that you may have well spent more initially purchasing a bigger house.

I would grab it at 530k if possible, do nothing to it, just live in it and set your loan up as i pointed out at point one, build some equity, noting your equity will come from the loan structure plus capital growth.

Then grab an investment property in 18mths time NG to minimise any tax you pay, as well as a share portfolio to maximise returns on the exploding small caps market and chinas deregulation.

If you use CBA, you can configure your banking in a one stop shop, especially the comsec account. Always check a loans comparitive rate before commiting.

Thanks again for your input – we had a look at the home in person which confirmed it is not for us. As for having a builder in the family, spot on. We have the opportunity to make renovations and extensions at an extremely good rate which is why we are looking for homes with that sort of potential. For us – it is no use getting caught up in land grabbing hype for something that is not going to suit the lifestyle we are trying to set up for ourselves.

I don’t want to sound like I am completely dismissing your opinion though. You obviously have a lot of knowledge and are closer to what is happening behind the scenes than many of us here.

arescarti42 said :

chewy14 said :

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

There’s absolutely no chance of this happening.

The Government has been very clear that allowing the Mr Fluffy affected blocks to be subdivided was a one-off to help them fund the buy back scheme.

There’s been plenty of community opposition around the negative impact subdividing just the few Mr. Fluffy blocks would have. No way is the ACT Government going to set itself up for massive community backlash just because a few developers want them to change the rules.

Many of these old suburban areas don’t have the infrastructure capability (e.g. sewers, power networks, roads, telecoms etc.) to support a another house on every second block without massive expenditure on upgrades anyway.

Happy to wager.

Here’s the public info
http://www.canberratimes.com.au/act-news/inquiry-gives-canberrans-another-chance-to-debate-the-return-of-fluffy-dual-occupancy-20150723-giefph.html

Maybe read through it in slow time.

Hosinator said :

vintage123 said :

Hosinator said :

vintage123 said :

Hosinator said :

We fixed for 12 months at 3.75% on our primary residence home loan. We went through a credit union and won’t be going back to the big banks anytime soon. The best our current lender at the time could do was a 0.01% drop to 4.2 on a variable loan.

Seek out credit unions or second tier banks, don’t bother with the big 4.

Which building society?
What was the fixed term?
What is the comparative rate?
Was there an application fee?
Did you pay for a valuation?

Community First Credit Union or rather their “online only division” Easystreet.
12 months and then it reverts to a variable, or if they have another special we can apply for it then.
Can’t recall the comparative, yes there was an application and valuation fee.

However, we will still save approximately $6000 in one year by switching.

Without the comparitive rate to compare, it is very difficult to examine if you have a better deal. I dont think I beleive your claim of saving 6k a year.

The $6k saving was between our Big 4 variable rate and account and the CFCU rate and account. We did the maths,a few times and came up with a one year saving of $6k. Hence why we moved.

I’ll add that there are no monthly or yearly fees and we get a 100% offset account.

I think you’re just jealous. 😛

Still not convinced. What is the comparitive rate?

Anyway, noting your dislike of the big four, the top three home lenders of the year were,
Newcastle permanent
Suncorp bank
Heritage bank

Furthermore the top 10 credit unions for the year were,
CUA
BCU
QCU
QCU Qantas
Catalyst money
QPCU
ICU
Uni credit
PCCU
GCU

What was your again, I am thinking you sold your self short as the above 13 would have bettered any deal.

As a CBA platinum, the words jealous are not in my vocabulary.

arescarti42 said :

chewy14 said :

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

There’s absolutely no chance of this happening.

The Government has been very clear that allowing the Mr Fluffy affected blocks to be subdivided was a one-off to help them fund the buy back scheme.

There’s been plenty of community opposition around the negative impact subdividing just the few Mr. Fluffy blocks would have. No way is the ACT Government going to set itself up for massive community backlash just because a few developers want them to change the rules.

Many of these old suburban areas don’t have the infrastructure capability (e.g. sewers, power networks, roads, telecoms etc.) to support a another house on every second block without massive expenditure on upgrades anyway.

Not just a few developers, it’s ALL the developers. The 150 companies.

Why do you think they are having the enquiry. It’s got nothing to do with the community. Instead of just ticking the approval, they have listened to developers and are now considering widening the scope of the rezoning.

Infill is a real issue in the ACT. The fluffy is an opportunity to explore the options and developer interest in moving forward with areas of rezoning.

I don’t think the conclusion will result in wholesale complete suburb rezoned, but it will be broader than just affected fluffy homes. You will see clusters and streets rezoned. If for example there are 6 of 10 homes on one street and say 5 of 10 on the backing street, then it would make sense to redone those two streets with dual occupancy seperate title conditions.

Very similiar to what is occuring in castle hill sydney, where two streets back to back have consolidated to sell as one entity, specifically to international developers, who can redevelop the 20 homes on the 1.5 hectare site and in return pay considerably more to the sellers for the consolidation.

The real winners will be those in unaffected homes within the cluster who will see the values of their blocks considerably,skyrocket upon rezoning.

vintage123 said :

dungfungus said :

Cracks now appearing in Chinese economy and our dollar is rapidly falling.
Two Australian banks have now increased mortgage investment rates .27% to address overweighting of their exposure in that ledger.
Prices for all commodities (including gold) are falling at a time when production inventories are not being cleared.
I wonder how many Australian mortgages will be under water by this Christmas.
Ah well, all is good on planet Canberra; lots of new cafes to review and the real estate industry confirms house prices here are rising again so nothing to worry about.

Dunga, china just recorded an annual growth of 7%. So with all things considered 7% growth during tough times is excellent. Cant see anything bad happening in the china market. Infact they have a target of 17 trillion to invest this year in overseas markets. Yeah their sharemarket recently fell 30%, but it did rise by 150% in the six months prior, so they are still 120% up on the deal. China is doing quite well if you ask me. 560 million middle class chinese millionaires have a considerable buying power. Its only up and up for china. Indias middle class is doing pretty good too, so i wouldnt be surprised to see some competition between the two countries for international investments.

China reported a recorded 7% growth – a lot of commentators are saying it is impossible to verify these figures.
The recent share market correction was stopped by the government there buying into the market and “nationalising” it for a short period. How sustainable is a 120% annual rise in a share market, anywhere?
The 17 trillion that China is reported to be investing globally may have trouble finding a home too.
Any thoughts on how Australia is going to repay the half a trillion dollars we owe them already?

vintage123 said :

Hosinator said :

vintage123 said :

Hosinator said :

We fixed for 12 months at 3.75% on our primary residence home loan. We went through a credit union and won’t be going back to the big banks anytime soon. The best our current lender at the time could do was a 0.01% drop to 4.2 on a variable loan.

Seek out credit unions or second tier banks, don’t bother with the big 4.

Which building society?
What was the fixed term?
What is the comparative rate?
Was there an application fee?
Did you pay for a valuation?

Community First Credit Union or rather their “online only division” Easystreet.
12 months and then it reverts to a variable, or if they have another special we can apply for it then.
Can’t recall the comparative, yes there was an application and valuation fee.

However, we will still save approximately $6000 in one year by switching.

Without the comparitive rate to compare, it is very difficult to examine if you have a better deal. I dont think I beleive your claim of saving 6k a year.

The $6k saving was between our Big 4 variable rate and account and the CFCU rate and account. We did the maths,a few times and came up with a one year saving of $6k. Hence why we moved.

I’ll add that there are no monthly or yearly fees and we get a 100% offset account.

I think you’re just jealous. 😛

chewy14 said :

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

There’s absolutely no chance of this happening.

The Government has been very clear that allowing the Mr Fluffy affected blocks to be subdivided was a one-off to help them fund the buy back scheme.

There’s been plenty of community opposition around the negative impact subdividing just the few Mr. Fluffy blocks would have. No way is the ACT Government going to set itself up for massive community backlash just because a few developers want them to change the rules.

Many of these old suburban areas don’t have the infrastructure capability (e.g. sewers, power networks, roads, telecoms etc.) to support a another house on every second block without massive expenditure on upgrades anyway.

vintage123 said :

chewy14 said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

I am happy to have a bet on it. Let me know the wager.

I have had 40 developers through the office in the last two weeks.
http://www.news.com.au/finance/real-estate/uks-shared-ownership-scheme-could-it-work-in-australia/story-fndban6l-1227453412448

Apparently you are already having a water on it by looking at these type of properties for those prices. I simply can’t see it happening on such a scale.

dungfungus said :

Cracks now appearing in Chinese economy and our dollar is rapidly falling.
Two Australian banks have now increased mortgage investment rates .27% to address overweighting of their exposure in that ledger.
Prices for all commodities (including gold) are falling at a time when production inventories are not being cleared.
I wonder how many Australian mortgages will be under water by this Christmas.
Ah well, all is good on planet Canberra; lots of new cafes to review and the real estate industry confirms house prices here are rising again so nothing to worry about.

Dunga, china just recorded an annual growth of 7%. So with all things considered 7% growth during tough times is excellent. Cant see anything bad happening in the china market. Infact they have a target of 17 trillion to invest this year in overseas markets. Yeah their sharemarket recently fell 30%, but it did rise by 150% in the six months prior, so they are still 120% up on the deal. China is doing quite well if you ask me. 560 million middle class chinese millionaires have a considerable buying power. Its only up and up for china. Indias middle class is doing pretty good too, so i wouldnt be surprised to see some competition between the two countries for international investments.

Ezy said :

vintage123 said :

Ezy said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Interesting, and thank you for the explanation – but given the information you are getting, the only people that would see this as a 650k block are those developer types. General Joe Public (me) look at this as and compare it to a similar house that sold in this street a few months back for 505k. To be honest, I haven’t seen many houses jump in value significantly over the last few weeks. If anything, they are the same as a few months ago.

The problem for me at this stage is lack of homes that offers good bang for buck renovation/extension potential. This particular home for me isn’t one I am interested in due to the way the house is skewed on the block. I have already sketched out a few extension ideas and what I had in mind wouldn’t be achievable due the building encroaching 1.5 metres from the boundary.

http://www.realestate.com.au/property-house-act-weston-120042137

Thats a different kettle of fish all together though – That house sold for 599k two years ago. The reason it fetched that 625k is because it was in an elevated position in Weston and on a nicer street. These houses always fetch a higher price than those down a few streets like the one we are discussing.

More recently, two houses sold on Sturges street. One for 440k! It was back in May and before some more information was released RE: Mr Fluffy, but I am seeing this from someone who is not too privy to what developers are doing behind the scenes.
http://www.realestate.com.au/property-house-act-weston-119620311
http://www.ozpropertyview.com/property-view/ACT/1386663844/9-Sturgess-Place-ACT/

My opinion – this house will go for around the 530 mark. Happy to eat my words, and have an ‘I told you so’ written to me, but I am just going on what I have learned in the 8 months of looking for property in this area. If it goes for the price you are saying, kudos to you – and ‘holy shit I better get my ass into gear’ to me.

Ezy, mate if you can get it for 530k then grab it. Dont overthink extensions or renovations, at the end of the day the land size in Weston will ultimately determine the value of homes. The other thing is if you buy one and overcapitalise through extensions or renos, your just throwing money away.

The only way i have seen people make money on renos, is if they are tradies, or they have family that are, or they convert a garage to a room etc. If you have to apply to council and get the tradies in, the cost are likely to be so high, that you may have well spent more initially purchasing a bigger house.

I would grab it at 530k if possible, do nothing to it, just live in it and set your loan up as i pointed out at point one, build some equity, noting your equity will come from the loan structure plus capital growth.

Then grab an investment property in 18mths time NG to minimise any tax you pay, as well as a share portfolio to maximise returns on the exploding small caps market and chinas deregulation.

If you use CBA, you can configure your banking in a one stop shop, especially the comsec account. Always check a loans comparitive rate before commiting.

Hosinator said :

vintage123 said :

Hosinator said :

We fixed for 12 months at 3.75% on our primary residence home loan. We went through a credit union and won’t be going back to the big banks anytime soon. The best our current lender at the time could do was a 0.01% drop to 4.2 on a variable loan.

Seek out credit unions or second tier banks, don’t bother with the big 4.

Which building society?
What was the fixed term?
What is the comparative rate?
Was there an application fee?
Did you pay for a valuation?

Community First Credit Union or rather their “online only division” Easystreet.
12 months and then it reverts to a variable, or if they have another special we can apply for it then.
Can’t recall the comparative, yes there was an application and valuation fee.

However, we will still save approximately $6000 in one year by switching.

Without the comparitive rate to compare, it is very difficult to examine if you have a better deal. I dont think I beleive your claim of saving 6k a year.

vintage123 said :

Ezy said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Interesting, and thank you for the explanation – but given the information you are getting, the only people that would see this as a 650k block are those developer types. General Joe Public (me) look at this as and compare it to a similar house that sold in this street a few months back for 505k. To be honest, I haven’t seen many houses jump in value significantly over the last few weeks. If anything, they are the same as a few months ago.

The problem for me at this stage is lack of homes that offers good bang for buck renovation/extension potential. This particular home for me isn’t one I am interested in due to the way the house is skewed on the block. I have already sketched out a few extension ideas and what I had in mind wouldn’t be achievable due the building encroaching 1.5 metres from the boundary.

http://www.realestate.com.au/property-house-act-weston-120042137

Thats a different kettle of fish all together though – That house sold for 599k two years ago. The reason it fetched that 625k is because it was in an elevated position in Weston and on a nicer street. These houses always fetch a higher price than those down a few streets like the one we are discussing.

More recently, two houses sold on Sturges street. One for 440k! It was back in May and before some more information was released RE: Mr Fluffy, but I am seeing this from someone who is not too privy to what developers are doing behind the scenes.
http://www.realestate.com.au/property-house-act-weston-119620311
http://www.ozpropertyview.com/property-view/ACT/1386663844/9-Sturgess-Place-ACT/

My opinion – this house will go for around the 530 mark. Happy to eat my words, and have an ‘I told you so’ written to me, but I am just going on what I have learned in the 8 months of looking for property in this area. If it goes for the price you are saying, kudos to you – and ‘holy shit I better get my ass into gear’ to me.

vintage123 said :

Hosinator said :

We fixed for 12 months at 3.75% on our primary residence home loan. We went through a credit union and won’t be going back to the big banks anytime soon. The best our current lender at the time could do was a 0.01% drop to 4.2 on a variable loan.

Seek out credit unions or second tier banks, don’t bother with the big 4.

Which building society?
What was the fixed term?
What is the comparative rate?
Was there an application fee?
Did you pay for a valuation?

Community First Credit Union or rather their “online only division” Easystreet.
12 months and then it reverts to a variable, or if they have another special we can apply for it then.
Can’t recall the comparative, yes there was an application and valuation fee.

However, we will still save approximately $6000 in one year by switching.

vintage123 said :

chewy14 said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

I am happy to have a bet on it. Let me know the wager.

I have had 40 developers through the office in the last two weeks, there is considerable lobbying occuring regarding the rezoning.

Disregard last link, this is the correct one’
http://www.canberratimes.com.au/act-news/inquiry-gives-canberrans-another-chance-to-debate-the-return-of-fluffy-dual-occupancy-20150723-giefph.html

Cracks now appearing in Chinese economy and our dollar is rapidly falling.
Two Australian banks have now increased mortgage investment rates .27% to address overweighting of their exposure in that ledger.
Prices for all commodities (including gold) are falling at a time when production inventories are not being cleared.
I wonder how many Australian mortgages will be under water by this Christmas.
Ah well, all is good on planet Canberra; lots of new cafes to review and the real estate industry confirms house prices here are rising again so nothing to worry about.

Ezy said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Interesting, and thank you for the explanation – but given the information you are getting, the only people that would see this as a 650k block are those developer types. General Joe Public (me) look at this as and compare it to a similar house that sold in this street a few months back for 505k. To be honest, I haven’t seen many houses jump in value significantly over the last few weeks. If anything, they are the same as a few months ago.

The problem for me at this stage is lack of homes that offers good bang for buck renovation/extension potential. This particular home for me isn’t one I am interested in due to the way the house is skewed on the block. I have already sketched out a few extension ideas and what I had in mind wouldn’t be achievable due the building encroaching 1.5 metres from the boundary.

http://www.realestate.com.au/property-house-act-weston-120042137

chewy14 said :

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

I am happy to have a bet on it. Let me know the wager.

I have had 40 developers through the office in the last two weeks.
http://www.news.com.au/finance/real-estate/uks-shared-ownership-scheme-could-it-work-in-australia/story-fndban6l-1227453412448

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Really?

I think your suggestion doesn’t have a snowball in hell’s chance of getting through.

If they allow subdivision of all blocks down to 700m2, they might as well throw away the territory plan altogether. How could they possibly meet their other planning requirements in these older areas if they make such a wholesale change?

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Interesting, and thank you for the explanation – but given the information you are getting, the only people that would see this as a 650k block are those developer types. General Joe Public (me) look at this as and compare it to a similar house that sold in this street a few months back for 505k. To be honest, I haven’t seen many houses jump in value significantly over the last few weeks. If anything, they are the same as a few months ago.

The problem for me at this stage is lack of homes that offers good bang for buck renovation/extension potential. This particular home for me isn’t one I am interested in due to the way the house is skewed on the block. I have already sketched out a few extension ideas and what I had in mind wouldn’t be achievable due the building encroaching 1.5 metres from the boundary.

vintage123 said :

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

I think you’re way off, i reckon $550k-$575k – keen to see how it goes.

Hosinator said :

We fixed for 12 months at 3.75% on our primary residence home loan. We went through a credit union and won’t be going back to the big banks anytime soon. The best our current lender at the time could do was a 0.01% drop to 4.2 on a variable loan.

Seek out credit unions or second tier banks, don’t bother with the big 4.

Which building society?
What was the fixed term?
What is the comparative rate?
Was there an application fee?
Did you pay for a valuation?

Ezy said :

Yup – exactly what I thought. Thats a very generous price.

Unfortunatley it will go between 625k and 650k. They would probably accept a pre auction offer of 650k.

The reason the prices have risen quickly in weston creek is due to the fluffy saga.

To be blunt, there has been considerable lobbying occurring behind the scenes regarding the rezoning of the fluffy blocks, and the precedence this sets for the unaffected blocks in the same streets and suburbs.

Developers have basically lobbied to say, we won’t touch them unless you allow unrestricted rezoning of the whole suburb, and green light seperate title subdivisions on 700m2 blocks.

So more than likely, once the governments works out that they will cash in considerably under a comple rezoning arrangement, the decision will be made to allow anyone to subdivide as long as the block is over 700m2, and they will be able to apply seperate title.

Therefore, anywhere near a cluster or in the general suburb currently on the market over 700m2 is considered desirable for those wishing to land bank or develop in the future.

Like I have said before, if you want to live in the area, grab something sooner rather than later, as prices are on the up.

Yup – exactly what I thought. Thats a very generous price.

vintage123 said :

vintage123 said :

vintage123 said :

Ezy said :

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

Ezy, for gods sake, hurry up and buy something in the woden valley. Its getting hot out there, and it is only going to get hotter. As for your loan, follow my advice at point one.

I meant to say weston creek. Bid to $650k on this one. http://www.dailytelegraph.com.au/news/nsw/taxpayers-footing-bill-on-treasurer-joe-hockeys-15-million-canberra-house/story-fni0cx12-1227026624945

As for the future, RBA cash rates are going down, however big four will be a bit stingy on passing the full cut on until they satisfy APRAs capital requirements.

Sydney is already gone and won the race to a medium price of $1m, Melbourne is next, followed closely by Canberra and Brisbane. Perth will take a bit of work and Adelaide, Darwin and tassy will take a long time.

What will drive Canberra prices, people from Sydney and Melbourne who are pushed out due to price. Whats going to drive people from Sydney and Melbourne. Chinas financial deregulation and the mandate to invest $17 trillion, yes trillion dollars overseas for diversity.

The other point is the recent changes to the Significant Investment Visa Scheme. Government has jigged it to enhance Australias venture capalists through the Small Caps market. This will feed the services industry in areas such as education, training, accounting and IT. Then you have dairy and beef. 560 million middle class of the 1.35 billion chinese population are being westernised and want to be cool drinking $10 a litre milk and $50 a kg steak. Then theres the lack of baby formula etc etc

God three hours of sleep is catching up on me, i meant this link, bid $650k on this house.
http://www.allhomes.com.au/ah/act/sale-residential/5-souter-place-weston-canberra/1317075630711

$650k? I’m not sure if you’re pulling my leg or not..

We fixed for 12 months at 3.75% on our primary residence home loan. We went through a credit union and won’t be going back to the big banks anytime soon. The best our current lender at the time could do was a 0.01% drop to 4.2 on a variable loan.

Seek out credit unions or second tier banks, don’t bother with the big 4.

vintage123 said :

rosscoact said :

MarkE said :

Here is a question for everyone: What do interest rates have to rise to before your mortgage bankrupts you?
The Australian RBA is nothing more than a bit player in the interest rate world.

I’m in the fortunate position of not having a mortgage but had one through the late 80s so I know what 17% looks like and it’s not pretty. The effect is that it pushes house prices down as people get out of mortgages. Arguably a good thing in these times.

Um rossco, I dont really want to open a can of worms here, but 1989 rate of 17% is not a one to one comparision with today. WHY? Because because that was the nominal interest rate in a time of 8% inflation. Real rates is the accounting term, which factors in inflation. The 1989 real rate was 9%

Todays nominal rate is around 6.5% and inflation is around 2.5%, so the real rate is around 4%. When you then factor in the biggest difference between now and 1989, that is two incomes versus one, the households capacity to repay the loan doubles the actual real rate to 8%.

So the reality is that the ballpark has changed and the biggest factor is the dual incomes ability on affordability. In this context 1989 real rate adjusted per income is 9%, today it is 8%. So today it feels exactly the same for two people servicing a mortgage as it did for one during the so called nominal 1989 17% period.

Thats interesting isnt it?

Wow, I hadn’t realised that. That does provide some perspective. I feel sorry for them now. Our mortgage was considerably less as a percentage of our wages too. I think we were looking at 1.5 of our household income in our mid twenties.

Lots of stress indeed.

Nice work and thanks.

vintage123 said :

switch said :

vintage123 said :

So today it feels exactly the same for two people servicing a mortgage as it did for one during the so called nominal 1989 17% period.

Thats interesting isnt it?

So are we going to have to legalise 3,4,5… person marriages soon to cope with the ever-increasing cost of homes?

Yep. Or rally around the concept of purchasing power whereby you purchase only a part in a property. This has caught on in other places and it is gaining some traction here in Australia.

Or we have a huge increase in our salaries, but i cant see that happening.

At the end of the day it is going to be very hard to compete with so many other people who have so much more money than the average young Australian.

Sharing like this
http://www.news.com.au/finance/real-estate/uks-shared-ownership-scheme-could-it-work-in-australia/story-fndban6l-1227453412448

switch said :

vintage123 said :

So today it feels exactly the same for two people servicing a mortgage as it did for one during the so called nominal 1989 17% period.

Thats interesting isnt it?

So are we going to have to legalise 3,4,5… person marriages soon to cope with the ever-increasing cost of homes?

Yep. Or rally around the concept of purchasing power whereby you purchase only a part in a property. This has caught on in other places and it is gaining some traction here in Australia.

Or we have a huge increase in our salaries, but i cant see that happening.

At the end of the day it is going to be very hard to compete with so many other people who have so much more money than the average young Australian.

vintage123 said :

Ezy said :

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

Ezy, for gods sake, hurry up and buy something in the woden valley. Its getting hot out there, and it is only going to get hotter. As for your loan, follow my advice at point one.

Yeah, i’m trying… i’m trying!

Our past loan we had a variable and fixed, we smashed the variable loan as much as we could. Worked well for us then, so we are going to do it again when the right house comes along.

Hey – are you able to shoot an email through to ezyonriot@gmail.com so I can discuss real estate with you? I wouldn’t mind someone partial to run a few things past. Thats if you don’t mind of course.

vintage123 said :

So today it feels exactly the same for two people servicing a mortgage as it did for one during the so called nominal 1989 17% period.

Thats interesting isnt it?

So are we going to have to legalise 3,4,5… person marriages soon to cope with the ever-increasing cost of homes?

vintage123 said :

vintage123 said :

Ezy said :

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

Ezy, for gods sake, hurry up and buy something in the woden valley. Its getting hot out there, and it is only going to get hotter. As for your loan, follow my advice at point one.

I meant to say weston creek. Bid to $650k on this one. http://www.dailytelegraph.com.au/news/nsw/taxpayers-footing-bill-on-treasurer-joe-hockeys-15-million-canberra-house/story-fni0cx12-1227026624945

As for the future, RBA cash rates are going down, however big four will be a bit stingy on passing the full cut on until they satisfy APRAs capital requirements.

Sydney is already gone and won the race to a medium price of $1m, Melbourne is next, followed closely by Canberra and Brisbane. Perth will take a bit of work and Adelaide, Darwin and tassy will take a long time.

What will drive Canberra prices, people from Sydney and Melbourne who are pushed out due to price. Whats going to drive people from Sydney and Melbourne. Chinas financial deregulation and the mandate to invest $17 trillion, yes trillion dollars overseas for diversity.

The other point is the recent changes to the Significant Investment Visa Scheme. Government has jigged it to enhance Australias venture capalists through the Small Caps market. This will feed the services industry in areas such as education, training, accounting and IT. Then you have dairy and beef. 560 million middle class of the 1.35 billion chinese population are being westernised and want to be cool drinking $10 a litre milk and $50 a kg steak. Then theres the lack of baby formula etc etc

God three hours of sleep is catching up on me, i meant this link, bid $650k on this house.
http://www.allhomes.com.au/ah/act/sale-residential/5-souter-place-weston-canberra/1317075630711

rosscoact said :

MarkE said :

Here is a question for everyone: What do interest rates have to rise to before your mortgage bankrupts you?
The Australian RBA is nothing more than a bit player in the interest rate world.

I’m in the fortunate position of not having a mortgage but had one through the late 80s so I know what 17% looks like and it’s not pretty. The effect is that it pushes house prices down as people get out of mortgages. Arguably a good thing in these times.

Um rossco, I dont really want to open a can of worms here, but 1989 rate of 17% is not a one to one comparision with today. WHY? Because because that was the nominal interest rate in a time of 8% inflation. Real rates is the accounting term, which factors in inflation. The 1989 real rate was 9%

Todays nominal rate is around 6.5% and inflation is around 2.5%, so the real rate is around 4%. When you then factor in the biggest difference between now and 1989, that is two incomes versus one, the households capacity to repay the loan doubles the actual real rate to 8%.

So the reality is that the ballpark has changed and the biggest factor is the dual incomes ability on affordability. In this context 1989 real rate adjusted per income is 9%, today it is 8%. So today it feels exactly the same for two people servicing a mortgage as it did for one during the so called nominal 1989 17% period.

Thats interesting isnt it?

vintage123 said :

Ezy said :

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

Ezy, for gods sake, hurry up and buy something in the woden valley. Its getting hot out there, and it is only going to get hotter. As for your loan, follow my advice at point one.

I meant to say weston creek. Bid to $650k on this one. http://www.dailytelegraph.com.au/news/nsw/taxpayers-footing-bill-on-treasurer-joe-hockeys-15-million-canberra-house/story-fni0cx12-1227026624945

As for the future, RBA cash rates are going down, however big four will be a bit stingy on passing the full cut on until they satisfy APRAs capital requirements.

Sydney is already gone and won the race to a medium price of $1m, Melbourne is next, followed closely by Canberra and Brisbane. Perth will take a bit of work and Adelaide, Darwin and tassy will take a long time.

What will drive Canberra prices, people from Sydney and Melbourne who are pushed out due to price. Whats going to drive people from Sydney and Melbourne. Chinas financial deregulation and the mandate to invest $17 trillion, yes trillion dollars overseas for diversity.

The other point is the recent changes to the Significant Investment Visa Scheme. Government has jigged it to enhance Australias venture capalists through the Small Caps market. This will feed the services industry in areas such as education, training, accounting and IT. Then you have dairy and beef. 560 million middle class of the 1.35 billion chinese population are being westernised and want to be cool drinking $10 a litre milk and $50 a kg steak. Then theres the lack of baby formula etc etc

Ezy said :

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

Ezy, for gods sake, hurry up and buy something in the woden valley. Its getting hot out there, and it is only going to get hotter. As for your loan, follow my advice at point one.

The strongest reason for choosing Fixed is that it offers certainty about repayment amounts – but the cheapest Fixed rate is unlikely to be much cheaper over the long run than Variable from the same institution.

The lenders have to make a certain amount of profit from a loan, and that ensures fixed is pretty much nevercheaper.

Cheapest is almost always going to be variable loan with offset account, minimal fees / no penalties, and from an institution offering lowest rates. (IE: Not the big banks.)

Ezy said :

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

The Canberra market has been flat for at least 4 years. Houses (not units) are in short supply, especially in desirable areas. The price of building new is huge.

We not in a bubble in Canberra. If anything, I think we’re getting toward the end of our stagnation period with perhaps a year or two to go, and then you’ll see property prices rise strongly.

Others have a different view. I guess what you have to work out is what your longer term aims are and work towards them.

All of this talk is unsettling for me as I am looking to purchase a property to live in.

If only I had a crystal ball to look into the future and see if any of this housing bubble bursting, recession, interest rates rocketing up etc will happen. I might look at renting for a while to see if any of this plays out.

dungfungus said :

Holden Caulfield said :

Only ever fixed my rates once. And then the GFC happened.

FML.

“FML.” ?

http://lmgtfy.com/?q=FML

MarkE said :

Here is a question for everyone: What do interest rates have to rise to before your mortgage bankrupts you?
The Australian RBA is nothing more than a bit player in the interest rate world.

I’m in the fortunate position of not having a mortgage but had one through the late 80s so I know what 17% looks like and it’s not pretty. The effect is that it pushes house prices down as people get out of mortgages. Arguably a good thing in these times.

dungfungus said :

Holden Caulfield said :

Only ever fixed my rates once. And then the GFC happened.

FML.

“FML.” ?

Fixing (rates) is My Life!!*

*may or may not be accurate

Holden Caulfield said :

Only ever fixed my rates once. And then the GFC happened.

FML.

“FML.” ?

Fix your rates for as long as possible. The Central Bank experiment with low rates is coming to an end as they discover the market is bigger than the Central Banks. The ELEPHANT IN THE ROOM of interest rates is the US Bond market. When did a 30 year bond at 2.11% coupon rate look like a good investment? This market is so over priced that when it crashes world interest rates will move up considerable and quickly.

Here is a question for everyone: What do interest rates have to rise to before your mortgage bankrupts you?
The Australian RBA is nothing more than a bit player in the interest rate world.

Holden Caulfield said :

Only ever fixed my rates once. And then the GFC happened.

FML.

OUCH.

Just had a look at the latest fixed options, minisculey lower than variable. Tells me that the standard variable should go down within next couple of months. The RBA cash rate should drop 25 basis points. What the banks do however will be dependant on how they interpret APRAs revised rules regarding capital holdings. If RBA cash rate drops 25 basis points, banks will probably drop the variable rate by 10 basis points for variable and leave fixed where they are.

Only ever fixed my rates once. And then the GFC happened.

FML.

VYBerlinaV8_is_back said :

vintage123 said :

VYBerlinaV8_is_back said :

dungfungus said :

Lock in the fixed rate as soon as you can – interest rates are about 4% now so they can only go another 4% lower – on the other hand, if they go 4% higher will you be able to handle that?

I don’t think rates can go much below about 3%. Even if the rba sets rates to zero, there’s still cost of business, admin, risk and profit margin to be had.

That said, I think 4% rates represent a once in a generation opportunity.

I have never utilised a fixed rate. Instead I utilised the loan period. Remain variable to ensure you have the lowest rate of the day. If rates start to trend higher, it usually takes a period before they pass the fixed rate, which at that point I negotiate with the bank to alter the loan period, say from 25 to 30yrs, or 35 to 40yrs, which thereby either maintains the current repayment irrespective of a rising rate, or in some instances reduces the repayment.

Fixed rates have maximum limits on additional repayments.

Fixed rates can surprise you with mortgage shock upon the rate period ending.

It’s easier to build capital with a long period variable rate, if you can pay extra into it. It also allows access to redraw for those opportunities which may create more wealth, I.e forex or shares etc.

Normally I’d agree, but I fixed my rates for the first time ever 2 years ago because the bank was doing fixed (3 yrs) for half a percent cheaper than variable. Over the last two years variable has gradually come down to be almost the same as fixed.

When fixed is more expensive than variable then I agree, but when fixed is cheaper, fix a part and leave a portion variable to pay down quickly.

If the fixed rate is lower than the variable, 9 times out of 10, it indicates that the variable is heading down. If the fixed rate is higher than the variable, 10 times out of 10, the rates are going up.

Fixed rate loan contracts are tight and allow little flexibility, if in the case your situation changes. You pay through the nose in convieniance just to have a tiny bit better deal for a little period of time. If you need to refinance or alter arrangements it is more difficult to do than a variable loan.

You wont find a great long term deal for a fixed loan. Banks usually peeter out with anything worthwhile more than five years.

vintage123 said :

VYBerlinaV8_is_back said :

dungfungus said :

Lock in the fixed rate as soon as you can – interest rates are about 4% now so they can only go another 4% lower – on the other hand, if they go 4% higher will you be able to handle that?

I don’t think rates can go much below about 3%. Even if the rba sets rates to zero, there’s still cost of business, admin, risk and profit margin to be had.

That said, I think 4% rates represent a once in a generation opportunity.

I have never utilised a fixed rate. Instead I utilised the loan period. Remain variable to ensure you have the lowest rate of the day. If rates start to trend higher, it usually takes a period before they pass the fixed rate, which at that point I negotiate with the bank to alter the loan period, say from 25 to 30yrs, or 35 to 40yrs, which thereby either maintains the current repayment irrespective of a rising rate, or in some instances reduces the repayment.

Fixed rates have maximum limits on additional repayments.

Fixed rates can surprise you with mortgage shock upon the rate period ending.

It’s easier to build capital with a long period variable rate, if you can pay extra into it. It also allows access to redraw for those opportunities which may create more wealth, I.e forex or shares etc.

Normally I’d agree, but I fixed my rates for the first time ever 2 years ago because the bank was doing fixed (3 yrs) for half a percent cheaper than variable. Over the last two years variable has gradually come down to be almost the same as fixed.

When fixed is more expensive than variable then I agree, but when fixed is cheaper, fix a part and leave a portion variable to pay down quickly.

VYBerlinaV8_is_back said :

dungfungus said :

Lock in the fixed rate as soon as you can – interest rates are about 4% now so they can only go another 4% lower – on the other hand, if they go 4% higher will you be able to handle that?

I don’t think rates can go much below about 3%. Even if the rba sets rates to zero, there’s still cost of business, admin, risk and profit margin to be had.

That said, I think 4% rates represent a once in a generation opportunity.

I have never utilised a fixed rate. Instead I utilised the loan period. Remain variable to ensure you have the lowest rate of the day. If rates start to trend higher, it usually takes a period before they pass the fixed rate, which at that point I negotiate with the bank to alter the loan period, say from 25 to 30yrs, or 35 to 40yrs, which thereby either maintains the current repayment irrespective of a rising rate, or in some instances reduces the repayment.

Fixed rates have maximum limits on additional repayments.

Fixed rates can surprise you with mortgage shock upon the rate period ending.

It’s easier to build capital with a long period variable rate, if you can pay extra into it. It also allows access to redraw for those opportunities which may create more wealth, I.e forex or shares etc.

VYBerlinaV8_is_back said :

dungfungus said :

Lock in the fixed rate as soon as you can – interest rates are about 4% now so they can only go another 4% lower – on the other hand, if they go 4% higher will you be able to handle that?

I don’t think rates can go much below about 3%. Even if the rba sets rates to zero, there’s still cost of business, admin, risk and profit margin to be had.

That said, I think 4% rates represent a once in a generation opportunity.

Central Bank rates are already at zero in many countries and few banks are offering rates above 3% (cash at call) in Australia at present. It shouldn’t be ignored that none of the money printing and lowering of rates has helped anyone anywhere, and all that has happened in Australia is retirees’ wealth has been eroded and a housing bubble has been created which will have disastrous consequences.
BTW, when will the government or the opposition come clean on admitting Australia’s sovereign debt can never be repaid? Neither side has even a credible plan to get the budget into surplus.
We are another Greece waiting for the pain.

vintage123 said :

Variable with unlimited extra repayments, weekly repayments with monthly interest calculation, with a loan term of 45 years with no penalty for early payout. This is the quickest and best way to build equity and increase further lending capacity.

The above was for owner occupied.
For investment, use an interest only investment loan, packaged with your salary and the rental income minus expenses to be negative geared.

In scenario one I paid off my house in 6 years. With scenario two I purchased multiple investment properties never more than $100 a week out of pocket. I was able to secure each next investment property at around 12 month intervals due to the Net gain in tax savings, nil tax on rental income, and a robust depreciation schedule. I did however lever my PPOR for the investment capital, so it is important to build that initial capital and the way to do that is at point one.

dungfungus said :

You may be correct about further interest rate cuts in the next 5 months but I have a contrary view to yours as I believe that as soon as the China bubble pops there will be a flight of capital out of Australia like we have never seen before and the Aussie dollar will plummet to .60c or lower which will have the RBA intervening by raising interest rates.

The resulting cost increases from imported goods (petrol and almost everything else) will feed inflation which will be already be growing from tax increases (GST is a cert. to go to 15%).

I won’t venture an opinion as to what will happen to the housing market but if I were contemplating buying I would wait until next year.

The entire Australian economy is basically a huge leveraged bet on China, so when China goes, so does Australia in a very big way.

I also expect the AUD to head into the 60s (and probably even the 50s and 40s), but I suspect the economy will be in such a poor state that no one will be spending, aggregate demand will be stuffed, and inflation won’t be a problem.

Remember, the RBA wants the AUD much lower than it currently is, Australian wages, manufacturing and service exports might actually be globally competitive at that level, and would help drive an export led economic recovery. Even if a lower AUD does cause some cost-push inflation, the RBA will “look through” it, they won’t raise rates and smash demand further.

dungfungus said :

Lock in the fixed rate as soon as you can – interest rates are about 4% now so they can only go another 4% lower – on the other hand, if they go 4% higher will you be able to handle that?

I don’t think rates can go much below about 3%. Even if the rba sets rates to zero, there’s still cost of business, admin, risk and profit margin to be had.

That said, I think 4% rates represent a once in a generation opportunity.

arescarti42 said :

I’d probably go variable.

Interest rates are already pretty low, but they’re likely to go even lower as Australia’s economy continues to falter and head towards recession.

The RBA will probably cut rates again, maybe twice, before the year is out.

You may be correct about further interest rate cuts in the next 5 months but I have a contrary view to yours as I believe that as soon as the China bubble pops there will be a flight of capital out of Australia like we have never seen before and the Aussie dollar will plummet to .60c or lower which will have the RBA intervening by raising interest rates.
The resulting cost increases from imported goods (petrol and almost everything else) will feed inflation which will be already be growing from tax increases (GST is a cert. to go to 15%).
I won’t venture an opinion as to what will happen to the housing market but if I were contemplating buying I would wait until next year.
Lock in the fixed rate as soon as you can – interest rates are about 4% now so they can only go another 4% lower – on the other hand, if they go 4% higher will you be able to handle that?

I’d split half and half, as some providers are offering lower fixed than variable. Focus on paying down the variable component as quickly as you can, as early gains multiply out over time. The benefit you receive from paying down your loan faster (ie reduced future interest) is also non-taxable.

I’d probably go variable.

Interest rates are already pretty low, but they’re likely to go even lower as Australia’s economy continues to falter and head towards recession.

The RBA will probably cut rates again, maybe twice, before the year is out.

Variable with unlimited extra repayments, weekly repayments with monthly interest calculation, with a loan term of 45 years with no penalty for early payout. This is the quickest and best way to build equity and increase further lending capacity.