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You can observe this (at least) in Germany right now. (Probably all over Europe, though.) Interest on saving accounts is < 1%, loans are cheap, so everybody's

You can observe this (at least) in Germany right now. (Probably all over Europe, though.) Interest on saving accounts is < 1%, loans are cheap, so everybody's trying to buy houses right now. House prices are rocketing up. There will be lots of tears and people will lose their home once this starts to change and the fixed rates run out on some of those very cheap loans.

Ekaros 5y ago
How common fixed rates are? In Finland they are mostly 12 month Euribor(currently at -0.501%). Ofc you can buy "rate cap" type of service, but even those are limited length...
- patrickk 5y ago
  In Germany, you can get fixed rate mortgages from 10 to 15 years around 1% interest. It's fuelling a housing bubble of course.
Loughla 5y ago
>and the fixed rates run out I think I'm confused. I have zero experience with Germany, so please be graceful with what may be a stupid question. So you're saying the super low rate is only for a set period of time, and will change at some point in the future, correct? If the rate is set to change at some point, you can't really call it a fixed rate, can you? I thought fixed rate meant that it was just that rate for the life of the loan. Hence, fixed versus variable. What am I missing?
- WhiteListed 5y ago
  Most banks offer a fixed rate for an x number of years while you pay your mortage in 30 years. The lower x is, the lower the interest you pay during those years. For example, banks can offer the following loans: - 20 year fixed rate at 1.30% - 30 year fixed rate at 1.42% So there is a possibility to gamble with the interest rates while still having a "fixed" rate.
- saiya-jin 5y ago
  I presume fixed rate on real estate loans. You take 25 year mortgage, while having first 10 years fixed because its so cheap. You as a buyer hope desperately super low interest rates will still remain after those 10 years. If not, many people will be royally screwed since their monthly payments can easily double/triple. Ie in Switzerland with their specific mortgages, it can easily go from USD 800 to USD 8000 per month if things go south, with drop in prices matching this development.
- allendoerfer 5y ago
  The loans have fixed interest rates for 10 or 15 years. You refinance after. So the tears come with a delay.
- Aeolun 5y ago
  You generally have the option of setting the fixed rate for a lesser period of time in exchange for a discount. At least that’s how it worked in Japan. So Floating rate: 0.7% 1 year fixed rate: 0.9% 5 year fixed rate: 1.2% 10 year fixed rate: 1.4% 35 year fixed rate: 1.6%
- postingawayonhn 5y ago
  Here is Australia mortgages are typically for 30 years but it would be unusual to fix your mortgage for more than 5 years. Once you reach the end of your first fixed period you can re-fix at whatever the market rates are at the time.
- nostrademons 5y ago
  The American system where you have a fixed rate for the entire length of the loan is an oddity worldwide, and largely created by post-WW2 housing policy. In most other countries all mortgages are variations on what we'd call ARMs in the U.S: you get a fixed rate for a certain term and then it resets periodically afterwards.
- zajio1am 5y ago
  > If the rate is set to change at some point, you can't really call it a fixed rate, can you? Hence, fixed versus variable. Fixed rate mortage has fixed percentage for an agreed period of time (fixation duration). Variable rate mortgage is based on current inter-bank market rate (or some other index), e.g. EURIBOR + X %.

Ekaros 5y ago

How common fixed rates are? In Finland they are mostly 12 month Euribor(currently at -0.501%). Ofc you can buy "rate cap" type of service, but even those are limited length...

patrickk 5y ago
In Germany, you can get fixed rate mortgages from 10 to 15 years around 1% interest. It's fuelling a housing bubble of course.

Loughla 5y ago

>and the fixed rates run out I think I'm confused. I have zero experience with Germany, so please be graceful with what may be a stupid question. So you're saying the super low rate is only for a set period of time, and will change at some point in the future, correct? If the rate is set to change at some point, you can't really call it a fixed rate, can you? I thought fixed rate meant that it was just that rate for the life of the loan. Hence, fixed versus variable. What am I missing?

WhiteListed 5y ago
Most banks offer a fixed rate for an x number of years while you pay your mortage in 30 years. The lower x is, the lower the interest you pay during those years. For example, banks can offer the following loans: - 20 year fixed rate at 1.30% - 30 year fixed rate at 1.42% So there is a possibility to gamble with the interest rates while still having a "fixed" rate.
saiya-jin 5y ago
I presume fixed rate on real estate loans. You take 25 year mortgage, while having first 10 years fixed because its so cheap. You as a buyer hope desperately super low interest rates will still remain after those 10 years. If not, many people will be royally screwed since their monthly payments can easily double/triple. Ie in Switzerland with their specific mortgages, it can easily go from USD 800 to USD 8000 per month if things go south, with drop in prices matching this development.
allendoerfer 5y ago
The loans have fixed interest rates for 10 or 15 years. You refinance after. So the tears come with a delay.
Aeolun 5y ago
You generally have the option of setting the fixed rate for a lesser period of time in exchange for a discount. At least that’s how it worked in Japan. So Floating rate: 0.7% 1 year fixed rate: 0.9% 5 year fixed rate: 1.2% 10 year fixed rate: 1.4% 35 year fixed rate: 1.6%
postingawayonhn 5y ago
Here is Australia mortgages are typically for 30 years but it would be unusual to fix your mortgage for more than 5 years. Once you reach the end of your first fixed period you can re-fix at whatever the market rates are at the time.
nostrademons 5y ago
The American system where you have a fixed rate for the entire length of the loan is an oddity worldwide, and largely created by post-WW2 housing policy. In most other countries all mortgages are variations on what we'd call ARMs in the U.S: you get a fixed rate for a certain term and then it resets periodically afterwards.
zajio1am 5y ago
> If the rate is set to change at some point, you can't really call it a fixed rate, can you? Hence, fixed versus variable. Fixed rate mortage has fixed percentage for an agreed period of time (fixation duration). Variable rate mortgage is based on current inter-bank market rate (or some other index), e.g. EURIBOR + X %.