Can you guys help me out with this then:
I live in Stockholm, Sweden. Crisis hasn't struck us with full force just yet. It will come, I know. But we do have the advance of surplus in state
I bought my apartment back in 2005.
Price tag then: SEK980,000 or $108 683.6
I took a loan, without down payment, all 980 grand, and I got a crazy low interest rate on it.
At most it has been worth SEK1,525,000 or $169,124.99
That was a pretty nice profit, but I didn't sell.
(My idea is that in time this top note will be matched, maybe even exceeded some time in the near future)
Since then, interest rates have been going up, but now they are declining again. Our State Bank, or "Riksbanken" has lowered its interest rates to
Earlier, last year, I tied up my interest rates for the coming 3 years
to a pretty OK rate. Not as low as it used to be, but still lower than
when it peaked. My expenses for the loan, however, has risen with roughly SEK1000 or $110.9 monthly. That kind of blows, but I can afford it.
Rates are at the present falling steadily, and I did at first curse myself for not choosing to have a "moving" or "unfixed" rate. That would make
me reach even below
the rates of my initial loan.
Still, my guts tell me I did the right thing.
Now my idea is that inflation will come, and it will come hard
I think that inflation will make the interest rates go up. This since banks see that people have "more" money, or at least, bigger numbers on their
pay checks due to the money losing value. I can see that once this is in full orbit, people will seem
to earn enough each month to buy
"loose" their homes.
Thus, banks will rise their interest to cosmic proportions to try make some
profit out of it.
For me, on the other hand, with my rates fixed for another three years will make a nice deal out of this since inflation will make my payment almost
Now, this is
too good to be true, I know.
But I have a hard time figuring out the true meaning, for me personally, with the entire crisis.
Let's say that the loan-crisis will be just as severe in Sweden as it is in the US, as it most probably will be.
What will happen to me and my loans you reckon?
I don't want to go ask the bank because they will certainly not tell me the truth if it involves something that does not turn into their profit...
Thankful for any help.
[edit on 20-2-2009 by Raud]