Factual Forecast on Irish mortgage interest rates

Hi,
There is a lot of talk going around interest rates hikes by banks on mortgages recently, so I want to start this thread and see can we get somewhat reliable forecast on interest rates in future 10 years provided euro stays as is( a wild assumption, but for the time being lets go with it). I have attached historic figures for last 36 years for the start. :
1975 11.25%
1976 12.5%
1977 13.95%
1978 14.15%
1979 14.15%
1980 14.15%
1981 16.25%
1982 16.25%
1983 13.0%
1984 11.75%
1985 13%
1986 12.5%
1987 12.5%
1988 9.25%
1989 11.4%
1990 12.37%
1991 11.95%
1992 13.99%
1993 13.99%
1994 7.49%
1995 7.00%
1996 6.75%
1997 6.90%
1998 5.85%
1999 5.60%
2000 6.09%
2001 6.09%
2002 4.70%
2003 4.20%
2004 3.49%
2005 3.65%
2006 4.86%
2007 5.46%
2008 5.86%
2009 4.16%
2010 4.02%
2011 4.39%


Source: cso

Few points first off.

Which rates are you basing this off? Different banks have widely different rates, look at the difference between PTSB and AIB a few months back.

Inflation plays a *HUGE* part in the interest rates. More than just interest rate minus inflation rate = real rate. The effects are cumulative over long periods of time.
To give an example using 1981, inflation ran at 20.34% for the year [1]. using your interest rate of 16.25%, you'd be better off paying the bare minimum on the mortgage. No tracker in today's terms could come close to that kind of difference.



[1] http://www.inflation.eu/inflation-rates/ireland/historic-inflation/cpi-inflation-ireland-1981.aspx

anuj21k said:

Hi,
so I want to start this thread and see can we get somewhat reliable forecast on interest rates in future 10 years provided euro stays as is

Click to expand...

There are known knowns; there are things we know that we know.
There are known unknowns; that is to say there are things that, we now know we don't know.
But there are also unknown unknowns – there are things we do not know we don't know.

Knuttell said:

There are known knowns; there are things we know that we know.
There are known unknowns; that is to say there are things that, we now know we don't know.
But there are also unknown unknowns – there are things we do not know we don't know.

Click to expand...

I did not know that I did not know that!