FBXL Social

I've said it before, and I'm going to say it again: inflation is here, the next step is interest rates start to rise a lot to deal with all of this inflation, make sure that your variable rate debts are paid off and if you have a mortgage that is about to renew renew it now while mortgage rates are at their lowest point in history, and renew for a long time. Interest rates are going to skyrocket, and the last time that this happened in the 1970s a lot of people had to give back their cars and give back their homes and were very badly hurt. By contrast, if your debt is fixed rate and all this happens while wages are going up and prices are going up, it's basically like a gift from the banks. Fixed rate is usually higher than variable rate, and that's for a reason. It's an insurance policy against higher interest rates in the future. With most rates near zero and at the lowest rates of history now is the time to lock in. Everybody always gets pissed off at the baby boomers because "they had it so easy" not as many people realize the incredible period of pain they had to go through in order for their $2,000 house to become a $500,000 house.

In my country there are no subsidized 30-year loans, and in fact the highest normal interest rate that people get is usually 5 years. I got a 10-year mortgage locked in because that's what I think is coming (after 10 years the interest rates go up too much to justify) and I also greatly decrease my amortization from 25 years to 15 years so that even if I turn out to be right and interest rates start to rise dramatically I can just start doubling up my payments about 5 years from now and still end up never having to pay the higher interest rates.

We can either choose to plan for the likely events in the future, or we can choose to grit our teeth and curse fate when it finally happens.

(I am not a financial advisor this is not financial advice, talk to a licensed advisor in your jurisdiction to find out the best choices for you)