Fixed Rates 04/08/2017

Hoped you had a good week.

Remember Monday is a bank holiday, but we will still be operating anyways!! 

Just last week I had mentioned about further rate hikes, today I will give a scenario based on popular solutions to clients.

In fact, I am delighted I gave the right advice and managed to save my clients from rate hikes and in return saving them some money. 

Two recent separate but common conversations

Scenario 

Clients: Can you please tell me what the rates are at the moment?

Me: 3.88% fixed and 4.7% variable are the best rates with my suggested lender

Clients: Why do you suggest it? I have heard that RBA cash rate is constant and rates will go down in the future

Me: At the moment, the rate disparity is almost one basis point different, and also you will get to lock in the rates at the great fixed rate offer. 

Clients: Ok that makes sense lets fixed it, if that is what you suggest.

Me: Great! By the way, there is a product from the bank called a rate lock. Have you heard of it?

Clients: Not really

Me: Basically you lock in the rates for up to 90days up to settlement, and if rate fluctuates upwards, you are secured with the agreed rate upon application. However, the downside is that there is a fee involved.

Clients: What are the fees and is rate lock necessary?

Me: Fees differ from lenders but typically between 0.1-0.15% of the loan amount with a cap of $750 or lesser. In this market, there is uncertainty over actions by RBA/ASIC and APRA and I do suggest from our experience a rate lock in my opinion will be beneficial. For instance, I have a customer who locked his rates at 3.99% and in two weeks - rates jumped to 4.39%. But ultimately, it will still be your call.

Client: Alright please go ahead to arrange it for me

In the end, rates went up for both my Westpac and St george clients. They were happy that they had done a rate lock. #happydays

Have a great weekend