For a typical 1 milion dollar housing loan, deciding between 3 year fixed rate loan of 1.8% against the floating rate loan of 0.8% is about 10k a year. Take that and multiply it by 5 for a 5 million dollar loan that a friend of mine has and it becomes 50k which can cause more sleepless nights even if we assume that it is loose change for someone with a 5 million dollar loan.
That is the dilemma a friend of mine had recently in deciding whether to hedge his housing loan.
He was deciding in whether to put on a 5 year interest rate swap at 1.6% to pay a fixed rate and receive a floating rate that would be used to service his floating rate loan. That difference worked out to be just about 65k per annum in interest difference, to his disadvantage.
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