What makes the choice between fixed and variable interest rates difficult is that we can only say in retrospect what was most profitable. If you have an interest rate that is fixed at 13 per cent for three years, while the market interest rate in the same period is reduced from 14 to 10 per cent, you have come out worse with the fixed rate loan than with loans that more closely follow the development in the market rate.
Therefore, when choosing a loan at a fixed or variable interest rate, your assessments of future interest rate developments will be decisive. Or maybe you put so much emphasis on your expenses being predictable, that you choose fixed-rate loans even though there is a risk that it will be more expensive than variable-rate loans?
If the interest rate level falls steadily over
Say, a ten-year period, the interest rate level in credit enterprises will follow, but always with a certain lag. Therefore, if you believe that interest rates will continue to fall, you should contact your lender to get a shorter term on your loan.
However, it is important to distinguish between the maturity of the interest rate and the total maturity of the loan, especially for mortgages that often run over a long period, often up to 30 years. If we look at the entire maturity of e.g. For 30 years, the interest rate on a loan with a three-year term will be adjusted a total of nine times throughout the term.
Remember that the tea must be made at the times when interest rates should be regulated. If you choose to take out fixed-rate loans, you should similarly choose a loan that has relatively frequent interest rate adjustments.
Please note that the ratio between interest rates
For fixed interest loans with short and long term maturities may change. When the interest rate for short-term fixed-rate loans (for example, one year) is above the interest rate for long-term fixed-rate loans, it is stated that many people in the market expect interest rates to fall in the future.
On the other hand, if there is little difference between the short-term and long-term interest rates, many expect the level of interest rates to remain more stable.