Wednesday, December 03, 2008


I was watching a report on A Current Affair last night (don't hold that against me - without ABC and SBS the only alternatives for background noise while I played WoW were Neighbours or Today Tonight) and they had a story on home owners who had locked their interest rate in, and were now complaining because everyone on variable rates were paying so much less than them.

Um... yes, but when we were paying $300+ more per month than you (on an average mortgage), you were laughing at us and gloating at your supposed business savvy.

Fixed vs variable insterest rates on your home loan will always be a bit of a gamble. Sure, if you fix your rate you could pay less than people owing a comparable amount on a variable rate, but then you could pay more sometimes too. It's the same for people on variable rates - two months ago the rate was high, repayments were almost crippling for some. It's just that now the tides have turned.

Rates will go up again. They will also go down again. Over the standard span of a home loan (let's say 25-29 years) this is going to happen a LOT. You get over it, and do what you have to do to cope with it.

I do agree somewhat with parts of the what the story reported - that of the banks making it financially impossible for people to change their loan or move it elsewhere. I'm not surprised the banks are doing this, but it's still poor form on their part.

But for those complaining cos their fixed rate is now more than the variable - I'm afraid I don't have much sympathy. Cos I know the next time the variable goes up, you'll be laughing again.

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