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So I am in Sweden. I have what I feel is a big mortgage and this month come off my 5 year fixed 1.3% rate. I have been paying it off a bit and saving monthly in stocks and funds at the same time. Since trumps election these have increased at a crazy rate and I wanted to know WTF is going on. Anybody got any articles about it. I need to decide if this is going to explode or continue. Pay off the mortgage or wait. I know this is crystal ball gazing stuff so impossible but from what I have read trump’s policies are widely regarded as being bad for the economy so why is this not being priced in? In the other hand does the market expect another asset price bubble like we have had before with very low interest rates. or is it a reaction to Trump’s policies supporting billionaires and tax cuts. How come no Liz Truss effect for crazy policies?
if this is going to explode or continue
The former. When IDK.
As you say, it is all a bit crazy. The Chicago business school has a lot to answer for.
edit
here’s some investor style drivel https://investorplace.com/hypergrowthinvesting/2025/01/the-simple-reason-why-stocks-are-soaring-right-now/
How come no Liz Truss effect for crazy policies?
‘too big to fail’? Expectation that proposed policies will not be enacted? Misogyny.
https://www.marke****ch.com/story/the-good-news-about-trumps-bad-economic-plans-they-might-not-happen-386d4024
I have watched Gary’s Economics. He is a bit of a stuck record. As in every video he does seems to make the same (very valid) comments. I just read a book about the house price bubble and how it has been a disaster for productivity, fantastic for banks and led to a huge transfer of wealth. But like the film idiocracy we can’t jump off the pyramid as our economy is built on debt
Bottom line, losses for the Big Boys are socialised - whether thru a bailout as per 2008/9, via tax policy which allows carry-overs or you're in Wall Street and never actually own the asset that lost it's value.
The rest of society though, like me and you, guess...
In the UK our economy suffers from the "Dutch Disease" in that it is concentrated too much in housing and financial and legal services.
The problem is that the correction is going to be extremely painful for a lot of people.
In the US, many people are speculating on risky assets to try and make up for the cost of living crisis. The stats about people borrowing on cards to speculate on assets is astounding, especially when they're concentrating and further leveraging their investments to performance chase.
All this drives volatility. There's also little incentive for democratic governments to change it because whoever is in charge when the music stops is going to make themselves unelectable for a generation IMO.
Similar boat, I want an extension and a new kitchen to replace the 70s conservatory and early 90's kitchen that's falling apart and the mortgage is due for renewal late '27.
But in the current market I don't really feel like emptying my ISA just yet!
Is it all going to collapse? I don't know. Tesla and Microstratergy are blatantly over inflated bubbles, other tech companies are actually doing really well. That concentration of wealth can't go on indefinitely though
n.b. the current gains in US stocks aren't entirely their own doing, the $ has gone up Vs £ so that's made it look alike a silly few months.
Hmmmm, if you're actually in a position to be able to clear your mortgage from savings OP then I'd certainly consider it, maybe look at what the interest costs would be for whatever period you're considering fixing for and compare that to what you'd earn on it if you kept it in the bank, just so you can estimate what the difference would be.
Plus you've removed a major outgoing from your finances going forward, the couple of people I know who have managed to squash their mortgages to zero still work but they have more options with their income i.e. they can save more an/or are maybe less nervous about spending, I reckon it's reduced their stress levels in some ways, and allowed them to seriously consider taking lower paid, less pressured work.
Truss very much ****ed our household and we ended up paying an extra £350 a month once we were able to remortgage, other people were able to re-fix sooner and got better rates, some were held up for longer and got stung with even more interest. our mortgage is manageable for us, but it's part of why my missus doesn't feel she can just quit a job she hates...
You've already answered your own question - nobody has a crystal ball and nobody knows what Trump is actually going to do (probably not even the man himself) so the market is waiting to see what happens. Certain policies could be very bullish for certain US stocks (why do you think most of MAG7 had front row seats at the inauguration) and boosting the markets has always been a key objective. But at the same time he has threatened a lot, and he has done quite a lot in a short space of time - people have got to recalibrate and work out what the hell is going on. Having said all that, today's close will be very interesting - the market is currently flirting with the December high and if bulls are in charge then I would want to see it closing the week at new highs.
The government and its patsy the BoE will hope to not let the housing market go to implosion mode.
It's in their interests to keep things moving up as they're probably hinging a lot of growth justification on it.
With the looks of it - there might be two 0.25% cuts in this year but I wouldn't count on it - these total morons are just swinging the inflation hammer around by keeping rates high, and just adding insult to injury in what is a mess of an economy and how to deal with it.
Currently the BoE and its owners the UK Government are operating different versions of the economy. It's frankly unhinged.
Curve ball - if Trump gets his way (and he could - and would be a interesting move) he might lean on the Fed to cut rates right down. If this is the case - pressure will be on the for the BoE to do the same.
There is a load of extra free money from iterest income absolutely accelerating asset markets in the US - how can this not lead to more inflation? In other words high interest rates makes inflation sticky.
Who knows? Economics and stablity are not something I would dare predict mortgage rates on.
There is a load of extra free money from iterest income absolutely accelerating asset markets in the US – how can this not lead to more inflation? In other words high interest rates makes inflation sticky.
Oh my days.... you are completely clueless.
Asset values will continue to rise.
In situations like this ask yourself in what way would I most like to be wrong.
My 2p for what it’s worth is that the us stockmarket will likely do very well over the next few years. The American population will pay the price for that growth with the degradation of what little freedoms and rights they have.
Therefore us in the civilised world can count our gains in our isas at the expense of the USA! USA USA! Population.
Risk management should be based on your risk appetite i.e if you are cautious then split the risk, pay off half the mortgage keep half in cash. Its good to have six months income on hand so you can also keep that much in cash and pay the rest off the mortgage. If you are looking for investment opportunities well thats more challenging, short term gains are just gambling, if you are looking at 10 year returns then gold or property.
A ‘big’ mortgage that’s currently on a 1.3% loan is always going to see a pretty big jump whether things go well or not in the next 12 months; that’s a historic rate that may never been seen again for decades and a jump in interest rate affects a big mortgage by quite a lot.
We bought in 2021 on a 5 year fix at 2.99% but our deposit was quite large and we only have £130k balance left on the mortgage so unless interest rates jump up quite a lot again we are looking at around £100 extra a month which is manageable.
There are plenty of calculators you can play around with to see how much it’s likely to cost you when it comes time to remortgage, it might be eye opening or it may settle your fears a bit.
The government and its patsy the BoE will hope to not let the housing market go to implosion mode.
OP is in Sweden
The government and its patsy the BoE will hope to not let the housing market go to implosion mode.
It’s in their interests
He's in Sweden.
The markets are loving the drill baby drill, the prospect of lower energy costs are a big boost for climate sceptic septics. In 20 years time it might not look such good value, or it'll be lost in the noise of all the other shite going on.
But yeah, gird your loins for a much higher interest rate.
I think Sweden has some sort of national wealth fund from their oil and gas industry.. So a lot of that goes into health care, social care etc. Rather than into the pockets of companies.
It's kind of a different kettle of fish. Especially when it comes to pension and retirement planning, etc?
Whereas in the UK if you don't have a healthy private pension and/or good investments and have paid the mortgage off...
... you'll beef hooked if you retire on a state pension and you still have rent to pay in the UK.
low mortgage rate and I'd leave it alone as its forced payments and you're still generating wealth as you're paying more into principal than on interest.
We paid off our mortgage but ended up not being diligent with an alternative to the payments so ended up with more "disposable income".
It was a much needed lifestyle change, holidays, time with the kids, flexibility of choosing what projects I took on. But then we sold and bought a bigger house to renovate but we've not been "saving" at any where near the same rate as we were when making our mortgage payments.
Essentially since becoming mortgage free, we would've made $100k in payments, much of that principal. We haven't put 100k into any other savings vehicles (however are renovating so adding hopefully not-insignificant value to the house).
Mortgage free at 40 was great, but my self employed retirement funds are essentially the house. We'd have to move somewhere less amazing though to cash out.
If you can be diligent and make those same equivalent payments into something else, then for sure.
On the bright side, we're not heavily invested in any Canadian stocks, so if Trumps 25% tariffs get enacted we're not set to loose significant sums like many did last time the Canadian economy suffered.
There are some much smarter people than us trying to make money based on getting out just before everyone else does.
When they have left, and the market crashes start buying. Worked for me at the beginning of the pandemic. I only regret not buying more stock units. Made a couple of hundred quid! Not enough to retire on!
Isn’t that Norway?
Yes I think you might be correct... my point is, financial planning will change a lot depending on what country you live in and are tax resident in etc..
Always pay off debt as quickly as is reasonably possible.
Mathematically you may gain more by investing, but its more risk.
The feeling of having zero debt, is liberating.
Current interest/mortgage rates will remain similar for the short/medium term, so people need to adjust to this new normal.
It depends... Being mortgage fee is a huge mental benefit..
But if you do the maths of paying it off early V's a returns if you invest the extra money into pension or ISA etc...
Always pay off debt as quickly as is reasonably possible.
in your risk averse view
Some would said that if you can borrow large sums of money than you have capital at cheap rates then it’s better to borrow
1.3% is cheap for a large loan (or at least it would be in the uk). I think OP needs to ask experts in Sweden STW rather than the UK
I over paid £75k off the mortgage in the early years, to clear it in 12 years. I suspect if that money had been dumped in my pension it may be worth much more now, but I’ll never know and I’m now living mortgage free, which is very liberating.
But for a couple of small blips, US stocks have been on a bull run pretty much since 2009, returning something like 15% per year over that time period.
Trump's election hasn't really changed anything. The S&P500 is up a few percent since November but it's been going up at a similar rate for 15 years, so nothing really has changed.
Maybe what you're seeing recently is the those returns being added to by the impact of the pound weakening slightly against the dollar.
As for whether you should stay invested or pay off the mortgage, who knows, but if you're stuck between those two options, remember that you can always do a bit of both.
I don't know anything about Sweden.
If I were OP in the UK, I'd pay off the mortgage if I could. You can immediately start ploughing the mortgage payments you're not making any more into an aggressive share portfolio. I don't see house prices crashing any time soon when we have massive net migration and an existing housing shortage and very slow construction of new housing stock - although I can see liquidity being a problem. You can always rent a house out for money every month. And if it all goes tits up you can live in the thing - which is important in life.
Maybe I'm too risk averse.
Some would said that if you can borrow large sums of money than you have capital at cheap rates then it’s better to borrow
Usually people trotting out warren buffets sage* advice.
As I said in the other thread pay attention to the compound period when doing your calculations. And remember savings and investing are two different things.
* Very easy to give and heed such advice when you have gazillions in the bank. For most it just results in them living beyond their means
Thanks for the advice. I was actually more interested in why trump is not having a Liz Truss effect. From what I have read drill baby drill to get cheaper oil is difficult as the cost of extraction must be met and the Alaskan oil is expensive to drill. Then I read under Biden oil production has surged anyway. https://www.reuters.com/graphics/USA-BIDEN/OIL/lgpdngrgkpo/
From what I have read drill baby drill to get cheaper oil is difficult as the cost of extraction must be met
It's all about where though.
Drill baby drill.means marginal plays and areas that have struggled to get approvals -but have good reserves will be drilled.
I was actually more interested in why trump is not having a Liz Truss effect.
Because Liz just made a load of stuff up that the markets didnt agree with, hence chaos.
You might not agree with Trumps policies, but they will be accepted by the markets.