Maximum rise in interest rates

[Tinnat]

Ok, it’s safe to assume the interest rates are going to rise significantly over the next year/s. But what is the maximum they are likely to go to before they start dropping? Currently looking into a variable rate loan, and I’m not over-enthusiastic about the possibilities…

[Anonymous]

Tinnat,

If I knew the answer to your question I could make an awful lot of money.

Sure they are going to start rising, probably this year, but I can’t see them starting to fall for several years. It’s too far in the future to make any sensible predictions.

The question you should start with is ‘what’s the highest rate you can handle?’. Next question, ‘how likely is that?’

Mark

[Tinnat]

Thanks Mark – my thinking too. However seeing how the interest rates just shot down in a matter of a year and a half makes me wonder how likely it is that they shoot up at the same rate…

[Anonymous]

I doubt it. The economy is still in a big mess, so they won’t raise rates fast. I think we are more likely to have 5%+ inflation before high interest rates.

[Author]

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