Bank interest rates

[Guest]

G'day members.
I'm trying to work out if it's worth changing loans at this crazy 2020 year.

Can anyone work out a $250,000 principal and interest home loan @ 3.16% over 22 years would cost in interest?

There's a fixed rate offer for 1 year, 2 years and 3 years @ 2.29%.
If i was to get the fixed rate offer for the 3 years @ 2.29%, how much will the savings be in interest in the 3 years compared to the 3.16% rate?

 

[user 4485]

You'd save about $7000 using the current rates i.e. 2.29% fixed 3 years & 3.16% your current rate but that's not taking into account any break fees or LMI you might have when refinancing? Depending on your loan conditions you might be worse off? Also the savings might be more if rates stay low when the fixed term ends or you can lock in another low fixed rate?

 

[Northeast]

And your current variable should be lower than 3.16%. You can always refinance to a different loan, different bank, better loan options, etc and still stay variable. Variable rates 'likely' to come down in the next 12 moths - but not guaranteed.

I think ING was around 2.89% variable a few weeks ago when we got a new loan for a new house. Old loan will finish when we settle this place.

We have gone back to Commonwealth with the 2.29% fixed for 3 years. Although variable rates 'may' go lower and we may be paying a little more than we could have been if we stayed variable we figure they can physically only go 2.29% lower...but they could go a whole lot higher.

Some of the more financially minded might be able to give a better overview of banks and rates and their cost to borrow but this is my basic understanding - and I'm happy for anyone to correct it. The Reserve Bank may set the cash rate but it is entirely up to the financial institutions if they follow the Reserve Bank lead. To finance stuff the bank has to borrow money also. If the costs for them to borrow increase (in an unstable global economy for example) then they will pass that cost on to the consumer - i.e. raise interest rates.

AGAIN - that last paragraph is my basic understanding and it could be wrong (quite likely is :8 ). Do not take it as financial advice

 

[Guest]

Thanks Mbasko.

It's roughly what I worked out, less the fees for the 3 years on the fixed rate.
After the fixed rate period ends, the loan reverts back to the principal and interest home loan % rates at the time.

Yes the % rates could be less, but it could also be a lot more.

 

[Guest]

Hey Northeast.

The bank I'm currently with did not pass on the. 25% Reserve Bank emergency rate cut :N:
And that's why I'm looking around for a better deal.

Also, my thoughts also regarding the much higher interest rates in coming years. :money: :fire: oop:

 

[limpalot]

If you do re finance, keep paying the amount that you pay now; you will drop the principle down $7000, and take years off the loan.

 

[Goldtarget]

The reserve has nowhere to go right now, if it wasnt for mortgage suspension enacted under the virus residential property prices would surely weaken.

What Im getting at is its a rigged game and playing a calculated risk on the honeymoon rate for 3 years isnt a bad plan.

I dont think theres too many levers that be pulled to make it a bad deal, saving exit costs should you try refinancing down the track. The amount saved ($7000- fees) is ok, but as Limpalot points out its the interest saved and time off loan thats a nice win.

Ive had the same bank, same branch for 32 years, so if it were me Id approach my bank first, but not everyone has that inbuilt relationship. These banks make Billions with a B, cant remember a time when I spoke to the branch or regional manager they didnt resolve any enquiry I had. Matched my last personal loan rate to a competitor which was 4.75% lower than their internal standard offer when I asked, albeit about 4 years ago.

I remember not so long ago when getting 5.5% fixed was a good deal :lol:

 

[Guest]

Thanks guys.
With the fixed rate @ 2.29% for 3 years, we are allowed to deposit $10,000 extra money for that 3 year period, this is good to have.

 

[Guest]

We got the 3 years fixed loan @ 2.29% which is a saving of $110 a month. A saving of $1320 per year and $3960 for the 3 years.

 

[user 5263]

Almost related to the topic. Did you see where Me Bank took depositors money from their advance payments redraw facility on mortgages and applied it to their mortgages presumably to stop them redrawing. They have acknowledged they should have told their customers but you can ring and arrange to have it returned. The phone number is .... wait for it 1300 308 357. At least we know the calibre of the guns they are using on their customers!!

 

[Swinging & digging]

ME Bank, makes out like its putting its customers before profits?
At the end of the day there just Banksters just like the rest.

 

[Ded Driver]

I had to have a chuckle at the title of this thread.
What interest rate?
I scored 1.75% on a 6 month term deposit at Bank of QLD last week, & thats a high rate amongst banks.
by the time I pay out income tax on it, it isnt worth crackers.
who remembers the late 80's when we had 15% on our investment accounts & 17%+ on our mortgage, & could get a car loan for 13% ?
we are now at the other far end of that spectrum!

 

[Ridge Runner]

I don't like it when they quote low interest figure's like that because the interest rate for that amount is actually 36.047%, I would much rather have real figures and numbers,

 

[CreviceSucker]

I had to have a chuckle at the title of this thread.
What interest rate?
I scored 1.75% on a 6 month term deposit at Bank of QLD last week, & thats a high rate amongst banks.
by the time I pay out income tax on it, it isnt worth crackers.
who remembers the late 80's when we had 15% on our investment accounts & 17%+ on our mortgage, & could get a car loan for 13% ?
we are now at the other far end of that spectrum!

I was rapt 10 - 14 years ago when Rabobank were paying 8 % interest for savings accounts :heart:

now its down to 2.25 % which is still better than big four who pay zero.

Even Bankwest were paying sexy interest until ComBank oop: took them over.

 

[Gpx5000]

I had to have a chuckle at the title of this thread.
What interest rate?
I scored 1.75% on a 6 month term deposit at Bank of QLD last week, & thats a high rate amongst banks.
by the time I pay out income tax on it, it isnt worth crackers.
who remembers the late 80's when we had 15% on our investment accounts & 17%+ on our mortgage, & could get a car loan for 13% ?
we are now at the other far end of that spectrum!

I was rapt 10 - 14 years ago when Rabobank were paying 8 % interest for savings accounts :heart:

now its down to 2.25 % which is still better than big four who pay zero.

Even Bankwest were paying sexy interest until ComBank oop: took them over.

Yeah, can't wait for interest rates to rise, I'm with Westpac and am only getting 1.85% on my savings :N: