Have I made a huge mistake?

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Gifts's picture
Gifts
Status: Member (Offline)
Joined: Nov 28 2008
Posts: 18
Have I made a huge mistake?

With all the reading i have done on hyperinflation - I decided to lock our mortgage in at [__]% for [_] years.

They are saying now that interests rates in Australia will fall to as low as 1960 levels.

Have i made a huge mistake?

Should i stand before hubby and say "sorry, i am an idiot"

Embarassed

[Ed. note: Specific information removed at request of poster]

scepticus's picture
scepticus
Status: Silver Member (Offline)
Joined: Jan 16 2009
Posts: 129
Re: Have I made a huge mistake?

Time will tell. No-one knows. 8.2 does seem rather high though.

Personally I suspect that if the figure above turns out to be a screamingly good buy, then you'll be more worried about where your next meal will be coming from than your mortgage payments.

I think the hyperinflation hoo-ha is majorly overdone.I could be wrong though..

 

 

Gibber's picture
Gibber
Status: Bronze Member (Offline)
Joined: Oct 4 2008
Posts: 35
Re: Have I made a huge mistake?

 

Work out what the break fee is today.


Work out what the break fee will be if rates drop 0.75% or 1%

RBA likely to drop by between 0.75 to 1%  Tuesday.

 Break fees are likely to go up when RBA drops rates. So it is going to be likely to cost you more to break after Tuesday.

 

straight's picture
straight
Status: Silver Member (Offline)
Joined: Aug 25 2008
Posts: 103
Re: Have I made a huge mistake?

I dont envy you having to make that kind of decision at this time.  The mistake may turn out to be having a mortgage at all in this climate. 

5 years time, wow, with the bond rates increasing as they are, with the American spending and all the other indicators i would say that you have done the 'right' thing...  in locking in the interest rates... wrong thing in having a mortgage.

"They are saying now that interests rates in Australia will fall to as low as 1960 levels. "  Who is the 'they'?  MSM are the perpetrator's of the status quo... they look outside to predict the weather. 

It was a ballsy move to lock in at this time, however i think there is a lot of smarts in doing so at this time.... besides, you have insured against what might be an horrific event of very high interest rates.  Well done for having the balls... so to speak.

 

jdownie's picture
jdownie
Status: Bronze Member (Offline)
Joined: Apr 7 2008
Posts: 58
Re: Have I made a huge mistake?

I tend to agree with straight, interest rates are heading down only because the government is deliberately forcing them down.  The Reserve Bank (just an arm of the government) manipulates interest rates by buying the financial assets (bonds, bills etc) of the banks thus inflating the bond market, thus depressing bond yields i.e. interest rates. The government is effectively weakening its balance sheet through all these purchases of commercial bank paper, and can only keep this up for so long before there is
(another) run on the
the dollar. Interest rates will surely then have to rise.

This doesn't mean however that house prices are going to remain at their inflated values, it doesn't seem likely with much of the capital (mostly borrowed anyway) flowing out of the country. So while you may have locked in a favourable interest rate, you may still wind up with a mortgage greater than the value of your house.

Gifts's picture
Gifts
Status: Member (Offline)
Joined: Nov 28 2008
Posts: 18
Re: Have I made a huge mistake?

Thanks everyone for your replys. I feel better now :)

[ . . . ]

[Ed. note: Specific content deleted at request of poster to preserve privacy]

Thanks everyone for your coments - i really appreciate it,

Davos's picture
Davos
Status: Diamond Member (Offline)
Joined: Sep 17 2008
Posts: 3620
Re: Have I made a huge mistake?

IF and it is a big IF, hyperinflation doesn't kick in before rates dip more, you can always refinance, if it wasn't mentioned I think 1% is where it pays.

Sandman3369's picture
Sandman3369
Status: Bronze Member (Offline)
Joined: Dec 20 2008
Posts: 71
Re: Have I made a huge mistake?

     I just decided to a buy a house out in the country.  Part of my reasoning was that if everything goes downhill (deflation) I won't really care if I'm underwater (as long as I don't lose my job!), because I plan to live there the rest of my life.  If things go the other way ( [hyper]inflation ) I won't care either since I'll be locked in at 5%.  I suppose it's all a gamble in the end.

     Good luck! 

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