Variable mortgages will hit many countries hard

Last post, I mentioned how our student loans were at a breakeven point due to rising interest rates. That’s bad, and the Biden administration has gone to the Supreme Court to show its plan is legal. Public student loans are deferred from payment until June 2023, or 3 months after the Supreme Court reaches a decision. The Supreme Court is expected to hear this case in February 2023.

This is a first step in addressing a student loan crisis where many take out heavy loans for deadbeat colleges, many times without getting a degree or a job in their course of study.

Variable rates don’t apply to student loans. Many countries outside the US use variable rate mortgages which reset every five years. See this great graphic from Axios.

Axios: Where tighter monetary policy hits homeowners hardest

For example, the Reserve Bank of Australia did a sensitivity analysis showing that a 2.5 percentage point hike in rates caused an Australian family, with typical income and mortgage debt levels, to see monthly spare cash flow drop 13%.


Imagine inflation rising, making normal goods and services more expensive, and seeing your spare cash flow drop by 13% because central banks raised rates on your mortgage. It speaks to the fact central banks are limited on dealing with pandemics, wars, supply chain disruptions, climate change, and labor shortages. Forget about the pain if your income is lower than average.

Here’s another quote, showing the impact on the UK.

What to watch: The problem may be most acute in the U.K., where rates recently soared amid broader market fallout from the failed tax cuts proposed earlier this fall. 

  • “A huge share of the tightening that the central bank executes will run through a massive income shock to 4 million or so households, on top of the cost-of-living crisis,” says Guha. She estimates the total number of mortgage holders on a variable-rate or a two-year fixed mortgage is 4 million.

If you are impacted by variable rate mortgages, let is know in the comments. How are you addressing inflation and higher mortgage rates?

In solidarity.

Sincerely yours,


  • Opinion: Another senseless tragedy
    Another senseless gun violence tragedy impacts our mental health.
  • Story: Tranquility
    A short story, by my daughter, themandalorian. Nestled in a picturesque village, surrounded by rolling hills and lush greenery, there lived a young maiden whose unwavering bravery and sharp intellect had earned her a place of admiration and respect among the local people. Her insatiable curiosity and unquenchable thirst for adventure were matched only byContinue reading “Story: Tranquility”
  • 200 posts later…
    We reached 200 posts on our blog. Maybe perseverance does pay off.

Published by smilingdad

My story is one of tragedy and redemption. We've made many mistakes along the way regarding our money. Our goal here is to show you how to take care of your money life long, and as much as we can, help the Earth along the way. I call it sustainable personal finance and ethical capitalism. Currently, I am a part time writer for Cleantechnica and part-time licensed financial professional, along with being a full-time dad.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: