Mortgage renewal time. Floating, fixed short term, long term?

[Oakie]

It's that time again. Rates are here http://www.westpac.co.nz/olcontent/olcontent.nsf/Content/Choices+home+loan+rates

Economic uncertainty and I'm picking that interest rates will be fairly flat for a couple of years. I'm tending towards 2 years @ 6.4% but going floating for a while @ 6.24% with the option to fix when things start to move upwards has a certain appeal too.

Currently paying 8.7% so whatever we do is an improvement.

Discuss.

[98tls]

It's that time again. Rates are here http://www.westpac.co.nz/olcontent/olcontent.nsf/Content/Choices+home+loan+rates

Economic uncertainty and I'm picking that interest rates will be fairly flat for a couple of years. I'm tending towards 2 years @ 6.4% but going floating for a while @ 6.24% with the option to fix when things start to move upwards has a certain appeal too.

Currently paying 8.7% so whatever we do is an improvement.

Discuss.

Sounds ok to me,also with WP and i signed up at 6.75 for 2 years back in October,ive been very lucky so far with the longer option.

[Woodman]

We fix ours every year. Dunno why but we always have. Won some lost some.

[steve_t]

Currently floating at 5.25% after some negotiation. Will probably look to go fixed term in about 3-4 months. OCR tipped to go up in the last quarter as will mortgage rates. Not only will the mortgage rates go up but they will go up fast, especially the floating rate which will have to go higher than the fixed at some stage.
The difference between 6.24% floating and 6.4% 2 years fixed isn't enough to risk missing the low 2 year fixed IMO. If those were my options, I'd be looking to go fixed in the 30-60 days.

[Usarka]

Inflation is through the roof at the moment (relatively speaking). If it wasn't for the earthquake + recession and the govt needing to stimulate the economic clitoris then interest rates would be on their way up right now.

[YellowDog]

Interest rates are going to stay low for a while. With he state of the economy, the Govmt wont risk pushing rates up by more than 1% for a year or so yet.

My advice, float until there is an indication that world rates are starting to rise.

Could be 2 years away!

[Mully]

Interest rates are going to stay low for a while. With he state of the economy, the Govmt wont risk pushing rates up by more than 1% for a year or so yet.

My advice, float until there is an indication that world rates are starting to rise.

Could be 2 years away!

Yep - what he said.

We've gone for reducing revolving - smashing the living hell out of the principle at the moment.

EDIT: Simply because we kept the payments we were making at 9.2% the same. No difference to us, but a massive hit on the principle

BNZ does one called "Total Money" where your savings offset your mortgage. We're looking at that one.

[superman]

It's that time again. Rates are here http://www.westpac.co.nz/olcontent/olcontent.nsf/Content/Choices+home+loan+rates

Economic uncertainty and I'm picking that interest rates will be fairly flat for a couple of years. I'm tending towards 2 years @ 6.4% but going floating for a while @ 6.24% with the option to fix when things start to move upwards has a certain appeal too.

Currently paying 8.7% so whatever we do is an improvement.

Discuss.

If I were you... I'd go over to Kiwibank who have current variable mortgage at 5.65%. Or usually you can tell your mortgage broker at Westpac about the Kiwibank deal and they usually match it rather than lose you. And Kiwibank have a special of locking in for 6 months at 5.4% at the moment.

Don't pay 6.4% when the market is that competitive. :yes:

[Shadows]

I know my shit and I'm floating for the foreseeable future. Long term rates right now are only good for certainty and the banks.

[Reckless]

Tony Alexanders latest blog I get them every two weeks (I think)?

He was 100% correct when going through the latest times predicting when to fix or not to in the last mortgage rates drop we just had! If you listened to him you'd be fixed for 5 years on good % now! LOL!!
Unfortunately I missed out as my mortgage was fixed over that period. Floating now till he stops recommending not to! Although he does say fix if you can find a 2 year at 6%.

This just came in 7:30 tonight so its the latest!
Very Interesting his comments on the charges council are putting on people subdividing and why the 70K or more (its more 100K believe me I'm an architectural designer) is preventing development and restricting house construction?? Look at page 7 all donations to the authorities just for the privilege!

He's a wise man and has been almost 100% correct in his predictions for the last 3 years I've been getting this!

[Oakie]

If I were you... I'd go over to Kiwibank who have current variable mortgage at 5.65%. Or usually you can tell your mortgage broker at Westpac about the Kiwibank deal and they usually match it rather than lose you. And Kiwibank have a special of locking in for 6 months at 5.4% at the moment.

Don't pay 6.4% when the market is that competitive. :yes:

KiwiBank are only marginally cheaper at those short term rates. (WP do 6 months at 5.59%). When you get to 2 year terms the rates are identical at 6.4%

[Edbear]

Just had a chat with our account manager as we're in the same situation. She recommends letting it float but keep an eye on trends and we can fix if we feel it necessary. She also believes rates will stay stable for a while.

[jasonu]

Over here you can easily get 5% fixed for 30 years. Mortgages and the way they are run in NZ are one of my biggest worries about moving back home.

[HenryDorsetCase]

Over here you can easily get 5% fixed for 30 years. Mortgages and the way they are run in NZ are one of my biggest worries about moving back home.

but you're bringing back the Yankee dollar, y'all can buy and sell all of us.


...........oh, wait........

[AllanB]

You live in Christchurch?

Float it - you may need to do a runner next time!

The only fixing I want going on relating to my home is the home :laugh::laugh::laugh:

[jasonu]

but you're bringing back the Yankee dollar, y'all can buy and sell all of us.


...........oh, wait........

If only that were true. The way things are going the NZD may well be worth more than the greenback.

[Oakie]

Still tossing up between floating at 6.24% and fixed at 6.4% but I don't think it will be the rate, per se, that the decision will be made on. What will be important is what it will cost me to go from floating to fixed when the time comes (if I float now). If I can get that change for free then I'll probably float but if it's going to cost me say $250 to change later there may not be enough margin between the 6.24 and 6.4 to make it worth while. Also to consider with floating is that I can pay off any extra amount I like but if fixed I can only pay back an additional 20% over my normal payment. I'll just have to see how all the factors stack up. Tome for one opf my famous spreadsheets!

[steve_t]

Still tossing up between floating at 6.24% and fixed at 6.4% but I don't think it will be the rate, per se, that the decision will be made on. What will be important is what it will cost me to go from floating to fixed when the time comes (if I float now). If I can get that change for free then I'll probably float but if it's going to cost me say $250 to change later there may not be enough margin between the 6.24 and 6.4 to make it worth while. Also to consider with floating is that I can pay off any extra amount I like but if fixed I can only pay back an additional 20% over my normal payment. I'll just have to see how all the factors stack up. Tome for one opf my famous spreadsheets!

Floating -> Fixed carries no fees :niceone: You only have fees when you break a fixed term agreement

[Oakie]

Floating -> Fixed carries no fees :niceone: You only have fees when you break a fixed term agreement

The fees I meant were the ones they can charge when changing ... like an admin fee to cover the bookwork regardless of which way you're going.

[jasonu]

The fees I meant were the ones they can charge when changing ... like an admin fee to cover the bookwork regardless of which way you're going.

Sounds like the bastards get you coming and going!

[davebullet]

Fix if:
A jump in 0.5% will screw you (ie. your debt servicing is high)

Float if:
The long term rates are only marginally more than the floating
You want the ability to lump sum more than 5% of the mortgage amount in any 1 year
You want to sell at short notice

Remember - fixed rates give you certainty but over the long term they exist to make the banks more money. In other words, the banks set the fixed rate at slightly higher than what the average floating rate would be over the period.

[steve_t]

The fees I meant were the ones they can charge when changing ... like an admin fee to cover the bookwork regardless of which way you're going.

I heard on the radio yesterday that ANZ currently have no fees when you switch from floating to fixed. I wonder if the other banks will follow suit. Most bank fees and even interest rates are negotiable to a certain degree

[hellokitty]

I heard on the radio yesterday that ANZ currently have no fees when you switch from floating to fixed. I wonder if the other banks will follow suit. Most bank fees and even interest rates are negotiable to a certain degree

Really? Damn! I was told it was $250 per loan to fix and that they would only fix for a maximum of 6 months - which to me seems expensive.
I have 4 loans - I wanted to combine them into 1 loan but they wouldn't do it as I would have to pay to break them etc. and the fees would be high.