3 ms·
> I know the US system is a little different with long-term fixed mortgages, but for much of the world on variable interest rates, central bank decisions have a
by blibble 3y ago
> I know the US system is a little different with long-term fixed mortgages, but for much of the world on variable interest rates, central bank decisions have an almost next day impact on income (and a fairly near term impact for those able to lock-in rates for a couple years).
in the UK: an interest rate change has an immediate effect on demand for new mortgages but a lag of several years on existing borrowers as nearly everyone fixes their mortgage for 2-5 years
(basically by buying an interest rate swap)
- nopassrecover 3y agoThat’s worth knowing! In AU some fix all or part for 2-5 years (typically 3 years or less, with discouraging rates for the longer term relative to current rates at the time to factor for risk) but it’s not universal. For example, as of mid 2022 only 5% of loans were taken as fixed. As a result most who did fix recently did so during Covid low rates for 3 years and are coming off now facing hikes from maybe 1.89-2% if they got the best fixed rates (at a time when the cash rate was 0.1% and variable was around 1%) to around 6% variable and 7.8% if they want to fix again.