As long as it's profitable for the lender, they'll honor it. But if they get a massive influx and it looks like they'll lose money on the deal, expect the bank to pull the pin on this and quite quickly. If you've learned anything about the rigged game gents it's that the banks don't lose - even the government loses against the banking cabal at the end of the day, you... have no chance. Your only assured bet is to not follow the herd and cash in where no one else is looking. The banks will take a smite on the chin from a small clique of clever investors as long as their net position over the rest of the sheep remains profitable. But when the rest of the flock looks to cash in, that's when the window slams shut. Your only defence against the banks is to simply not play their game. The table is tilted folks, the game is rigged as the late George Carlin famously said.
So just get in now whilst interest rates are low and not at their absolute lowest. What do we always say around here about trying to pick the bottom?
Our how bout 'if it sounds to good to be true it probably is'. A high stakes gamble with absolutely no certainty. May aswell borrow money and go to the casino.
+1 to JisLizards post above but I'll add that on an investment property the loan is staying the same presumably the property value is increasing but the kicker is the rent will be inflating - so buy 100k property @ 6% interest with rent of $120/week (6.2% yield) assume 100% loan interest only and 15 years later property worth 200k rent $240/week (12.5% yield) loan still 100k.* For me the inflation on the yield is the sweet part of the deal your holding costs remain similar throughout the life (barring maintenance and management if not self managed) but the return keeps on improving. * numbers are pulled out of backside for demonstration purposes.
Interesting reading. Unfortunately i too believe that wages will not keep up with high inflation and banks will almost certainly jack up loan rates like they did in the late 80s/early 90s. As for the 15 year fixed rate (or any fixed rate) some people choose to fix a portion of their loan and leave a portion variable.
Good strategy if you own your primary place of residence and investment properties IMO - I fixed recently on investment properties leaving the PPOR floating, pay down the PPOR ASAP since it is not tax deductible leaving the investment properties fixed for 3 years on sub 6% rates and interest only terms to maximise the tax benefits.
If you can make a loan at fix rate. You will win in the long time. The ideal time is 10 years if the lender use french system. In argentina allways win when you buy with fixed rate loan. The answer in usa and australia to the goverment debt is inflation and the solution to inflation not became hyperinflation is up the interest rate. Whith a fixing loan you win with inflation and hyperinflation. And not lost when they up the interest rate. I pay my first month at half of my wage. (1998) I pay my last month at 1/20 of my wage And after 2008 the house is only mine.
