Prognosis for interest rates long term?

[lollipop]

Having seen that interest rates are going up this week and probably into 2007, where can I find some info/advice/opinion as to the long term? ie next 5 yrs or so?? Personally I think thy might fall again but would like other opinions! Whats the feeling here on AAM? Cant decide whether to fix my mortgage or not and if so for what term..

thanks for any opinions/advice!

 

[bearishbull]

If you want to know what rates will be for next 5 years your best guide is to look at interest rate futures. There a discussion in the great financial debates.

 

[CCOVICH]

If curious about whether or not to fix-use the search facility-this topic comes up every few months.

And just to add to what bearishbull has said-the futures price indicates where the market thinks rates will be-the market can and has been wrong in the past, and 5 years is a long time in the context of interest rates.

But that is an issue that is best discussed in he existing thread(s) in The Great Financial Debates.

 

[Bank Manager]

Having seen that interest rates are going up this week and probably into 2007, where can I find some info/advice/opinion as to the long term? ie next 5 yrs or so?? Personally I think thy might fall again but would like other opinions! Whats the feeling here on AAM? Cant decide whether to fix my mortgage or not and if so for what term..

thanks for any opinions/advice!

Lollipop, anyone that tells you for certain what interest rates will be is a wiser person than most. Having siad that most economists are indicating that by this time next year they will be 1% higher than they are today. Most suggesting that we'll see a .25% increase during the next four quarters (albeit that there is some feeling that they may increase by .5% in the next week or so). None of them suggesting a reduction for the forseeable future (but bear in mind my first line).

My advice for what worth..........

a) if you have concerns re possible increase in repayments and your ability to afford same, then I'd suggest you seriously consider fixing rates - term may be influenced by the level of your concern, but I'd suspect you'll look at between 2 and 5 years.

b) if you are the type of client who will want to get out of a fixed rate agreement the minute rates fall (and you're not getting the benefit) - then again I'd suggest you seriously consider, because you probably shouldn't fix as there will likely to be break-out clauses and costs if you do want to break the agreement.

c) an option not often considered (because most people appear to think the option is either to fix all or fix none), but one I regularly suggest is to break one's mortgage in to two or even three portions - i.e. place some on tracker variable - some on say a two year fixed and some on say a five year fixed. Doing things this way hedges your bets somewhat and means you won't be fully exposed no matter what happens rates over the medium term.

Hope that's of some help.


BM