Let's say you have a $1m home loan and $15k of credit card debt:
- Person USA - The home loan is fixed, and rates increase by 5%.
- Person AUD - Rates increase by 5%.
Person USA
- Increased borrowing cost for their $1m home loan = $0 (as it's a fixed rate)
- Increased borrowing cost for their $15k of credit card debt = $750
- Total impact +$750/year
Person AUD
- Increased borrowing cost for their $1m home loan = $50,000
- Increased borrowing cost for their $15k of credit card debt = $750
- Total impact +$50,750/year.
Despite increasing rates by less, the impact is 67x more.
Moral of the story is, you can't directly compare interest rate increases in a fixed rate world to that of a floating rate world which is there the RBA lives.
Let's say you have a $1m home loan and $15k of credit card...
Add FMG (ASX) to my watchlist
 (20min delay)
|
|||||
|
Last
$19.77 |
Change
-0.210(1.05%) |
Mkt cap ! $60.22B | |||
| Open | High | Low | Value | Volume |
| $19.66 | $19.80 | $19.20 | $156.1M | 7.997M |
Buyers (Bids)
| No. | Vol. | Price($) |
|---|---|---|
| 28 | 20257 | $19.77 |
Sellers (Offers)
| Price($) | Vol. | No. |
|---|---|---|
| $19.78 | 2410 | 11 |
View Market Depth
| Last trade - 15.46pm 04/10/2024 (20 minute delay) ? |
| FMG (ASX) Chart |