Interest Rates

[Bob Kane]

But as trump and Britex have taught us, anything can happen, and it usually does.

What has been happening a lot over the last 8 years is a lot of chicken lickens crying about the sky is falling.
The threatened impending rise in interest rates is still being threatened, any day soon...

[Wayne]

The threatened impending rise in interest rates is still being threatened, any day soon...

You mean they didn't do a jump recently?
Looked like it to me.
I don't think we can extrapolate the rise and say it will keep going up at that rate but with no other changes in the macro environment I don't see them going a lot higher or lower for a while.

[Nick G]

Yeah they just went up .75% on the longer tenors

[Bob Kane]

Yeah they just went up .75% on the longer tenors

You don't have to pick the longer terms,you know.
I'm picking the lowest rates which are short terms.

[eri]

^

me too

would rather have the guaranteed saving now

than a possible saving later on

as wheeler said

the ocr may now stay stuck for years

[Don't believe the Hype]

^

me too

would rather have the guaranteed saving now

than a possible saving later on

as wheeler said

the ocr may now stay stuck for years

while others prefer certainty over savings - whatever helps you sleep better at night.

i could save $500 - $1000 by not insuring my car ... It is a great saving until that one time I need insurance

[Wayne]

while others prefer certainty over savings - whatever helps you sleep better at night.

i could save $500 - $1000 by not insuring my car ... It is a great saving until that one time I need insurance

If you saved the $1k insurance for your car for 10 years then maybe you didn't need insurance - ie self insured.

So long as you think you know what you are doing it is fine - a conscious decision to do whatever you do.

[WINZ]

^

me too

would rather have the guaranteed saving now

than a possible saving later on

as wheeler said

the ocr may now stay stuck for years

There seems to be a common misconception here that interest rates are largely anchored to the OCR (which as you note, Wheeler thinks is unlikely to increase for several years).

Whilst there is a minor correlation with the OCR, interest rates by and large are a function of the supply and demand of credit funds and therefore rates are determined by the supply of domestic (e.g. term deposits) and offshore wholesale funds (e.g. covered bond issues).

If interest rates rise globally (bear in mind the US Fed are predicting 3 rate rises this year) then this may impact the wholesale cost of offshore funding. In a tightening market, any increase to bank's funding costs will likely be passed on to the end borrower, and any increases in the long-end of the swap curve can lead to sharp jumps in longer-term rates as borrowers rush to fix in a rate.

[eri]

^

it probably helps

that if a few accounts are juggled

the small mortgage can be paid off anytime

[McDuck]

If you saved the $1k insurance for your car for 10 years then maybe you didn't need insurance - ie self insured.

So long as you think you know what you are doing it is fine - a conscious decision to do whatever you do.

You'd be wise to at least have third party.
For that Lamborghini you side swipe on the motorway.

[Anthonyacat]

If you saved the $1k insurance for your car for 10 years then maybe you didn't need insurance - ie self insured.

You'd be wise to at least have third party.
For that Lamborghini you side swipe on the motorway.

Or when you skid off the road and through the side of someone's house...

I've said before here, I insure against catastrophic risk only. Don't bother with contents insurance, income protection, health, etc, etc... I self-insure for everything else.

But absolutely have house insurance on every property, and third party on the car.

[Wayne]

Or when you skid off the road and through the side of someone's house...

I've said before here, I insure against catastrophic risk only. Don't bother with contents insurance, income protection, health, etc, etc... I self-insure for everything else.

But absolutely have house insurance on every property, and third party on the car.

I have insurance.
Remember my quote also had
"So long as you think you know what you are doing it is fine - a conscious decision to do whatever you do."
Also remember that this little peice was in response to fixing short term and taking the saving rather than long term and maybe paying less (or paying more).
So long as you really have analysed the risk then fine - run with it.

[Lanthanide]

Wouldn't income protection and health insurance come under "catastrophic risk"?

[Anthonyacat]

Oh absolutely. And for those with a lower risk tolerance, insuring absolutely everything and paying more overall to avoid surprise expenses makes sense.

Low-excess full cover pet insurance is a good example; blows my mind that people can manage to pull the money together for a premium every month, but couldn't handle a surprise $500 vet bill.

[Anthonyacat]

Wouldn't income protection and health insurance come under "catastrophic risk"?

Not anymore. We've structured our life so we can survive on either of our incomes if one of us could never work again. A pretty big hit, but not a catastrophe at all.

Of course, should that ever happen, we'd probably insure the remaining worker. Depending whether our rentals and other investments can be relied on to support us.

And I'm not for a minute recommending others avoid the cover, it depends on your own situation.