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Kelsey’s guide to mortgages and home loans, for beginners

HomeNOT TRYING TO SELL YOU ANYTHING, JUST FREE INFORMATION THAT YOU MAY FIND HELPFUL

How Much Interest is Normal?

The answer is that no-one knows – it is this uncertainty over interest rates that provides the excitement of the loan and mortgage market and makes for deals, winners and losers. Interest rates go up or down, and are usually affected by certain factors in the economy – these include levels of inflation [banks tend to push rates up to keep inflation down], employment levels, recessions, global factors such as wars or natural events, fluctuations in the financial markets. No one can predict how these events will go so don’t even try, and don’t believe anyone that says they can, although it is the job of the financial sector to try and predict.

As a rough guide, the lowest national interest rates tend to be around 3%, the highest up to 20% - although these are extremes – over the last 30 years an average rate of 8% may be a good middling guesstimate. The thing to bear in mind is that you should always factor in the possibility that rates will rise when you are budgeting for the mortgage that you can afford, and if you get a mortgage at the bottom of the cycle don’t be fooled into thinking that rates won’t be higher in 5 or 10 years time.

 

 



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