Euribor and interest rates during the peak oil crisis

gurucat

My mortgage is euribor + 0.33

Do you recomend me to transform it to a FIX INTEREST RATE instead of VARIABLE INTEREST RATE?

Will the interest rates go up or down after the peak oil? The economy will slow down, the prices will grow, what about the euribor?

Thanks! Wink

americandream

There's talk of the Central Banks using the interest rate mechanism to fight non-core inflation of the oil and food variety. Just how far they will go in capping this beast with this mechanism, whilst our energy dependance revolves around finite oil, I have no idea. Added to that, growth has all but stalled in the global economy bar Chindia.

The signs are ominous. I wouldn't venture near debt under any circumstances at the moment.
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Bugger me, I hear oil's runnin out mate!

MrBill · Expert Joined: Sep 15, 2005 Posts: 5220 Location: Eurasia

Euribor has been creeping up as central banks retreat from rate cuts to help the banking sector weather the credit crisis to a tightening bias to fight inflation.

The ECB has kept rates steady at 4-percent, but has signalled its willingness to raise rates should CPI stay stubbornly high. And it will because the ECB cannot control external inflation caused by excessive money supply creation abroad, so it has limited policy options to fight that imported inflation, especially energy where prices are set globally.

In all honesty, I do not know you from Jack, but if you can afford a fixed rate mortage, go for it. You will not gain much by keeping it floating at this point. Reduce your refinancing risk if you can. I think globally we will see double digit core inflation again before we see a return to the stable lows of the past decade. But do not take my word for it. Talk to your local banker, accountant and lawyer first. Cheers.
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The organized state is a wonderful invention whereby everyone can live at someone else's expense.

Starvid

Don't talk to your banker, as his primary interest is selling you expensive financial services, not helping you! Very Happy

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Peak oil is not an energy crisis. It is a liquid fuel crisis.

kevincarter

I think it is such an unpredictible question that's better to have a fixed interest rate for safety, you'll loose some money in the short term but you can conider this amount to be paying for your tranquility. But that's only my opinion, each personal situation is different, I agree that right now is a very bad time to get in debt.

Or you can do the following too: go to the bank clerk and ask him from the bottom of his heart what he'd do if he was you, if he tells you to keep it variable then go for a fixed rate, if he tells you to go for a fixed rate then leave it variable, those suckers never help you at all. (Unless you're rich)
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When someone interprets as derogatory almost anything that is said about him (or about groups with whom he identifies) we conclude that he has inferiority feelings or low self-esteem.

gurucat

My bank allows me to change Euribor+0.33 (updated every 6 months) to a fix rate of 5,90 % during 3 years.

It's a little bit more expensive, but I would not profit from interest rate declines! Sad

Would you change?

kevincarter

I would, but it also depends on what happens after those 3 years, back to +.33? Any fees? A good deal would be if you could get a fixed rate for 30 years or so, but I guess they're not offering that. (they used to offer it when it was at 2.something and the fixed rate was about 6. Bank never loses.

Every personal situation is different, as I said I'd do it only to have no worries but I'd also try to get out of debt as soon as possible, cutting on unnecessary stuff and planning something for real, but hey, I'm a doomer!. I think PO is all about the economy and that many may find themselves unemployed soon. The question you should ask yourself is: it's my job recession proof? Do I live on a ugly suburban home where there is no public transportation and car dependent?

Also if you read your mortgage papers carefully it probably says there is a limit on the interest rate they can charge you, so that may give you more tranquility.

Nice to see catalunatics around finally, benvinguts!
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When someone interprets as derogatory almost anything that is said about him (or about groups with whom he identifies) we conclude that he has inferiority feelings or low self-esteem.