[Finance] Interest Rates/Inflation

[BadFish]

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]

Possibly

Maybe

 

[BadFish]

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]

will go down a bit, then up a bit.

 

[Tubby Mondays]

will go down a bit, then up a bit.

Then to me.

And then back to you.

 

[Weststander]

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]

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]

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!]

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]

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]

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]

Only Mr Bloom can predict the future