Staring at what seemed like a cloudy horizon, I made two calls:
I contacted an EV car dealer, trading in my diesel, and called my electrician to discuss solar panels and a home battery pack. It felt like everywhere I turned, commentary about the economy and markets was bordering on hysterical. Inflation was suddenly the only topic anyone wanted to talk about, and the noise would push almost anyone to lock in the longest fixed term they could find.
But in the middle of that noise, I had a moment of calm. The fundementals still apply and the same approach which has worked for my clients for years can still work now.
The obvious answer is not always the correct one.
Start With Your Own Circumstances
How much you should fix, and for how long, still depends on you—your plans, your time horizons, and your tolerance for uncertainty.
Some key questions to consider:
- How long do you plan to stay in your current property before you need or want to trade up (or down)?
- How long do you need certainty for?
- Is your income likely to change in the coming years?
There will almost certainly be more inflation, and that may lead to higher interest rates. We’ve already seen some of this. But there is also a slight possibility that interest rates could move down temporarily. The future path of rates is uncertain. That uncertainty is exactly why structure matters more than prediction.
Why Hedging Still Matters
A good financial adviser(like us) can help you build a structure that is both suitable and smart for your situation. Hedging your bets remains important because no amount of headlines, opinions, or noise actually makes predicting the future easier.
If things don’t go well—if the economy slows significantly—interest rates could come under downward pressure. That could happen for a couple of reasons:
- Central bank intervention
If high energy prices, supply issues, or broader shocks slam the brakes on domestic spending, central banks may step in to “save the fabric of society.” That can translate into policy moves designed to support growth and, at times, lower rates. - Slower spending and tighter borrowing
A milder scenario is one where oil and energy keep flowing but at higher prices, the war or geopolitical risk continues in the background, uncertainty lingers, and both spending and borrowing slow down.
When borrowing slows, banks may begin to compete more aggressively for market share—for example, through sharper pricing or attractive cashback offers. (Like the unprecedented 1.5% during last Christmas)
Inflation will impact interest rates—but when, how, and for how long remains unknown.
Moving Forward Smartly
In an environment like this, the goal is not to perfectly predict the future. The goal is to build resilience and flexibility into your financial decisions.
For many people, that can mean:
- Not going “all in” on the longest possible fixed term just because everyone is talking about inflation.
- Considering a mix of fixed and variable, or staggering fixed terms, rather than a single, blunt decision.
- Aligning your decisions with your life plans—career, family, property moves—rather than just the latest headline.
The road ahead may be bumpy. There will be more noise, more commentary, and more moments where the “obvious” move feels emotionally comforting but may not be strategically sound. The key is to keep moving forward—calmly and smartly—get financial advice.
And remember: It might get a bumpy but we will get through this together.
