[Finance] Interest Rates/Inflation

BadFish · Jan 23, 2025

I have a financial question for those far more knowledgeable than me in such matters (this includes my cat).

I am wondering about the wisdom of fixing some of my mortgage for the next few years.

My understanding is that interests rates are set to drop here in Australia and we have seen a peak so it seems like it's not the best idea.

However I also keep reading that our Orange friend in the US And his economic policies are likely to cause excessive inflation. My questions are:

Is this high inflation likely?
If the US have massive inflation does that mean the rest of us will also?

I apologise in advance if this is a stupid question but my cat couldn't (or wouldn't) help.

Tubby Mondays · Jan 23, 2025

Possibly

Maybe

BadFish · Jan 23, 2025

Tubby Mondays said:
Possibly

Maybe

Thanks Bjork.

Well that's that decided then

Edit to say, my guess is this is as best a prediction as one can make?

beorhthelm · Jan 23, 2025

will go down a bit, then up a bit.

Tubby Mondays · Jan 23, 2025

beorhthelm said:
will go down a bit, then up a bit.

Then to me.

And then back to you.

Weststander · Jan 23, 2025

If the protectionism/tariffs threat is fully followed through, it would lead to inflation in the US. But Trump says a lot of things. Then higher interest rates are used to control inflation. Some punters complain that’s unfair/illogical, but central banks say that it’s to contain secondary inflation.

The world follows the US.

But with the falls you mention forecast for Australia I wouldn’t fix just now. But certainty might mean a lot to you.

zefarelly · Jan 23, 2025

THe only certainty is random variation.

I'm not sure Id fix right now . . . But I have no calculated reasoning.

5 years ago it seemed simple/logical to fix for 5 years . . . . Brexit hadn't kicked in, we knew it would . . . Our best guess was we may be through the worst in 5 . . .hopefully we are . . . . . But quite probably not. . . . . . Its been a most turbulent time.

Do your homework . . . . Do what works for you. . . . . Then find the best deal that suits.

I can't best guess this summer let alone a year at the moment . . . . The world is properly f***ed up.

Mr Phil · Jan 23, 2025

Could go either way. I’m fixing next month for 3yrs.

5yr seems too restrictive, 2yrs seems too short given you have to pay somewhere between £995-1395 on product fees every time you remortgage, seems a happy medium to me

Bob! · Jan 23, 2025

He's apparently trying to get OPEC to cut oil prices so that Russia can't make money from their oil.

Who knows what will happen?

Uptown Dunk · Jan 23, 2025

Mortgage rates are priced using swap rates which are (expected) future interest rates. Swap rates will price in all available information therefore theoretically there should be no difference whether you take out a longer or shorter term mortgage as over the full mortgage term the price should be the same, based on today’s rates.
That said, if a trade war kicks off it will likely fuel inflation, and higher interest rates, which is no good for anyone. However the financial markets don’t currently expect that to happen.
Good luck with whatever you decide to go for.

FairWeatherFan · Jan 23, 2025

If you want certainty then fix.

All we can do is guess what the future might be. The cats might know, but they aren't talking.

astralavi · Jan 23, 2025

Only Mr Bloom can predict the future

AlbionBro · Jan 24, 2025

astralavi said:
Only Mr Bloom can predict the future

I feel I have had some success predicting the future, but I can't predict a horse race to save my life, hence I do not do it!

I see calm waters ahead after a choppy 2/3 years. But Keir will need to chop Rachel quickly.

Change at Barnham · Jan 24, 2025

The best experts on what the markets will do are all employed by the financial institutions.
So, the deals on offer won't be far from what is going to happen in the next few years.

If in doubt, don't gamble too much by getting locked into a fixed % rate, just go with the flow and avoid the stress and frustration of over paying if rates do drop.
It's all a massive gamble, and depends whether you want to throw the dice to maybe save a couple of hundred quid each month, or worse still, pay a load more than you need to if you pick the wrong deal.

Even the governor of the BofE, can't be sure.

The Maharajah of Sydney · Saturday at 12:42 PM

Change at Barnham said:
The best experts on what the markets will do are all employed by the financial institutions.

Err, no they're not.
The best experts trade for themselves, like myself for 35 years and now retired.
The "best experts" employed by financial institutions are just economists with a lot of theory who don't have the balls to trade.
Then further down the rung you have financial journalists who didn't obtain a high enough degree at Uni to get in the door as an economist at a financial institution.

South Stand Bonfire · Saturday at 12:45 PM

BadFish said:
Thanks Bjork.

Well that's that decided then

Edit to say, my guess is this is as best a prediction as one can make?

It’s really difficult to call. I suspect rates in the UK will slowly edge down. Inflationary pressure here has been fuelled (no pun intended) by energy and oil prices imo since Putin decided he needed to extend his territory. No idea how the Aussie market is affected by that

South Stand Bonfire · Saturday at 12:47 PM

astralavi said:
Only Mr Bloom can predict the future

I knew you were going to post that comment.

raymondo · Saturday at 1:29 PM

BadFish said:
I have a financial question for those far more knowledgeable than me in such matters (this includes my cat).

I am wondering about the wisdom of fixing some of my mortgage for the next few years.

My understanding is that interests rates are set to drop here in Australia and we have seen a peak so it seems like it's not the best idea.

However I also keep reading that our Orange friend in the US And his economic policies are likely to cause excessive inflation. My questions are:

Is this high inflation likely?
If the US have massive inflation does that mean the rest of us will also?

I apologise in advance if this is a stupid question but my cat couldn't (or wouldn't) help.

If you want help from your cat, you need to change your name

dwayne · Saturday at 1:33 PM

The Maharajah of Sydney said:
Err, no they're not.
The best experts trade for themselves, like myself for 35 years and now retired.
The "best experts" employed by financial institutions are just economists with a lot of theory who don't have the balls to trade.
Then further down the rung you have financial journalists who didn't obtain a high enough degree at Uni to get in the door as an economist at a financial institution.

No. The best traders on average will work for a bank or hedge fund betting someone else's money! Not to say there aren't amazing retail traders out there.

LamieRobertson · Saturday at 1:33 PM

Weststander said:
If the protectionism/tariffs threat is fully followed through, it would lead to inflation in the US. But Trump says a lot of things. Then higher interest rates are used to control inflation. Some punters complain that’s unfair/illogical, but central banks say that it’s to contain secondary inflation.

The world follows the US.

But with the falls you mention forecast for Australia I wouldn’t fix just now. But certainty might mean a lot to you.

USA sneezes the world catches a cold

Such an appropriate saying

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[Finance] Interest Rates/Inflation

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