What is your anxiety rate?

What is the interest rate on your credit? What is your effort rate? What is the potential return on your investments? These are common questions that we are used to. But there is another question we should be able to answer: what is your anxiety rate? I would even say that the answer to this last question must be given before taking any decision, be it debt or investment. Also read: Interest rates are rising, what awaits us and what to do?

But what is this anxiety rate anyway?

It is nothing more, nothing less, than the our ability to deal with unforeseen events and fluctuations that we do not control. Knowing our anxiety rate is fundamental for making financial decisions. This rate will allow us to understand which is the best financing solution for our profile and, of course, the investment solutions that best suit our reality.The more anxious we are, the greater protection we must guarantee, in order to reduce this noise in our day-to-day management. One of the questions that I have been asked the most in recent months is whether it is better to opt for a fixed, mixed or variable rate. And it is in this environment that the rate of anxiety arises. Because the answer to this question is not linear. It depends on several factors, in particular the way we deal with the unknown and our financial capacity to face “surprises”. Read also: How to avoid financial anxiety?

Mortgage credit: Fixed, variable or mixed rate?

Since last year, we have felt the effect of rising interest rates. Those who have mortgage loans, associated with a variable rate, have seen their mortgage payments increase. And it was this context that led many people to look for the fixed rate. Why? To protect themselves from rising interest rates. Is this the best decision? It depends. As I said before, it depends on several factors, and in this article I will only focus on the anxiety rate, which is the topic that brings me here. high anxiety rate, should I opt for a flat rate. If I’m a person who deals badly with fluctuations in interest rates, then it’s best to protect myself. We must not forget that, when contracting a fixed rate, we will pay a premium. A good analogy is life insurance. We always pay for this insurance in the hope that we will never need to use it.The flat rate acts as a safety net we have for extreme cases. It serves to not have headaches in the future, to have peace of mind and peace of mind that the value of the installment does not fluctuate. On the other hand, if we have a average anxiety rate, we can opt for a mixed ratein which, for a short period (two or three years), we have the fixed rate, waiting for this period of greater turbulence to attenuate. we have no anxiety at all, opt for a variable rate may be the best decision. This is in an optimistic perspective that rates will drop in the near future, which is not as far-off a scenario as one might think. There are already some indicators that point to the possibility of declines in the second half. In practice, we need to see if we can accommodate the fluctuations within our budget and if we manage to sleep peacefully in a period of greater turbulence. Looking at the historical behavior of the Euribor, we have evidence that in the medium/long term it pays more to choose to have credit indexed to a Euribor rate than to a fixed rate. However, this should not be the decision argument. The important thing is to ensure that we have the financial capacity to face these periods, no matter how short they may be. In short, before moving on to a mortgage loan, the first thing to measure is our anxiety rate. Then we have three options, one of which is much more stressful (variable rate), and another much more relaxed, but with a premium in terms of cost (flat rate). : Interest rising: How far can my credit installment be increased? Cláudio Santos began his career in the banking sector in 1992 at Loyds Bank, ending in 2012 at Deutsche Bank after passing through Banco Fomento Exterior and Banco BPI. After an international experience of 3 years as Commercial Director, he joined in 2016 at Doutor Financeira. He is currently a Partner, Board member and Chief Commercial Officer (CCO). The information contained in the article is not binding and does not invalidate the full reading of documents that support the matter in question.