Hedging interest rates and property prices with ASX 10 year government bond futures

[RussianAussie]

Good day,

Have you ever tried hedging mortgage interest rate risks with ASX futures?

Share your experience please!

Best regards,
Alex

 

[DeepState]

Re: Hedging interest rates and property prices with ASX 10 year government bond futur

Good day,

Have you ever tried hedging mortgage interest rate risks with ASX futures?

Share your experience please!

Best regards,
Alex

It is possible. Alternatively, you can ask for a fixed rate mortgage arrangement and, effectively, get the bank to do it for you on a set and forget basis.

If you think you can time the interest rate movements to do better, then bills, 3s and 10s futures can be utilized. Good luck with the calculations on the hedge ratios that best achieve that....

 

[RussianAussie]

Re: Hedging interest rates and property prices with ASX 10 year government bond futur

It is possible. Alternatively, you can ask for a fixed rate mortgage arrangement and, effectively, get the bank to do it for you on a set and forget basis.

If you think you can time the interest rate movements to do better, then bills, 3s and 10s futures can be utilized. Good luck with the calculations on the hedge ratios that best achieve that....

Actually I want to buy real estate in 2017-2018 and want to hedge possible price increase if case if interest rates will drop to 1% range with limited risk if property market will go to correction.

Alex

 

[DeepState]

Re: Hedging interest rates and property prices with ASX 10 year government bond futur

Actually I want to buy real estate in 2017-2018 and want to hedge possible price increase if case if interest rates will drop to 1% range with limited risk if property market will go to correction.

Alex

Then you are attempting to hedge property futures using interest rate futures. No law of physics prevents you from making the attempt. No law of physics says the relationship will work as you expect either. If the purchase value of the property is large relative to your wealth, it would be ill-advised.