Am I positively or not at all affected by rising interest rates with a 20 year fixed mortgage?
All I can think of is if it stops inflation wiping out my pay increments then that's a plus.
Will reducing the supply of cheap credit really push down prices of everyday goods? Or is the fuel situation gonna rawdog us no matter what?
Well if you have a 20 year fixed rate, rising interest rates won't make a tack of difference there. If you have savings, it might shift the rates on them from "hahaha, fuck off" to "here's a pittance, and you'll be happy about it"
Depending on how well your salary tracks inflation, relatively high inflation can be pretty good, if you have a €300k mortgage on a €50k salary, that's a 6x multiple.
If you increase that by 10% this year, you're down to a 5.5x multiple straight away. Course, it's not even vaguely that simple, but it's worth keeping in mind that inflation can be good for some people.
Reducing the supply of cheap credit will reduce prices.
Take that example of a €300k mortgage on a €50k salary.
With a 3% mortgage over a 20 year term, that's €1,664 a month.
With a 5% mortgage over a 20 year term, it's €1,980 a month
Putting zero effort into it (i.e. single income family, not mucking about with tax allowances n all that), €50k is €3,394 a month take home from a random salary calculator on the web.
So you've gone from 49% of your income going on mortgage payments (possible but that's very high) to 58% of your income going on mortgage payments.
Makes it far more likely the punter with a €50k income won't be given that oversized mortgage.
And of course if, by some miracle, they do get approved for that mortgage, they have significantly less disposable income to spend on other stuff.
Fundamentally, if there's less money around to spend on stuff, and that money is more expensive to obtain. people won't be spending as much and that puts pressure on suppliers to drop their prices (or reduces how much they sell...)
