As a FTB how will you be affected by interest rate hikes?

Marg said:
I can see these people experiencing more pain as interest rates rise than ftbs.
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Couldn't aggree more.

Of the three couples i know who have traded up in the last year only one (finalising the deal as i type this) have had sense enough to sell the previous property. Everyone else is attempting to play the landlord game though one is gradually realising it's not the easy money she thought it would be.

Bar from myself the former couple have received criticism from everyone else up to and including outright abuse from one of the parents that "they must like throwing away money"....
 
Eurofan said:
Bar from myself the former couple have received criticism from everyone else up to and including outright abuse from one of the parents that "they must like throwing away money"....
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I know a young gay couple, and they're upgrading already. They've done a deal for the new house, which won't be built until sometime next year (they say it's a done deal - does this mean they can't back out???), and haven't decided yet if they are going to sell their current home. I mean, they certainly aren't in the megabucks category, but as usual the notion that property=dead cert. exists.
 
I am in that situation . . . have an apartment but we have bought a house. I think I will sell it soon but nobody else seems to think that's a good idea.
 
annR said:
but nobody else seems to think that's a good idea.
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[Respectfully] what does it matter what other people think? What do YOU think, it's your finances.
 

It better to perhaps throw away a profit of say 50,000 than to lose 50,000 of your money !

You dont really notice not gaining 50K but you sure do notice if you lose it.
 
Sure everyone in ireland wants to be a landlord,it's hilarious stuff alltogether,i've two friends in the same senario i told them to sell first house and get a small mortgage on their new property and in a few years they will be mortgage free and laughing.
Everyone else told them they were mad and rolled out the usual irish property mantra.
As someone else said these are the people going to be in the worst position of all when the correction comes,a ftb while maybe in negative equity is not forced to sell in a falling market.
A price correction in this country will more that likely tip the economy into recession,a lot of foreigners will go home imho and unless you can guarantee that you can rent out the second property that's a serious weight around your neck.
You cannot jetision property overnight (as many irish people seem to think you can) i went sale agreed on a property in 1 week,it still took a further 12 weeks to complete the deal,they could havew pulled out at any stage up to week 9.
If people think the gasumping on the way up was bad,wait till you see the gazundering on the way down.
 
walk2dewater said:
[Respectfully] what does it matter what other people think? What do YOU think, it's your finances.
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Just pointing out the sentiment out there.
 
thewatcher said:
If people think the gasumping on the way up was bad,wait till you see the gazundering on the way down.
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will be a VERY bitter pill to swallow for alot of people i'd imagine , maybe then will they realise the stupidity of bidding on 4 or 5 houses at once
 
Duplex said:
After six years the Bank of Japan has raised interest rates from 0 (zero) to .25%. A significant move.
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Here's two words that are now gonna affect every FTB, yet none of them know it yet.. "carry trade".
 
soma said:
Here's two words that are now gonna affect every FTB, yet none of them know it yet.. "carry trade".
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I doubt there's been much carry trade into the Irish market. Care to elaborate?
 
soma said:
Here's two words that are now gonna affect every FTB, yet none of them know it yet.. "carry trade".
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The carry trade can be explained this way.

The cheapest money on the planet was Japanese 0% interest loans.

You could borrow at 0% for 6 months and speculate elsewhere , say in Icelandic bonds, you would make 5% . Then you would pay back the Japanese loan.

The 'carry trade' , taken with the ECB emergency base rate of 2% between 2001 and 2005 m was a giant slosh of ultra cheap money into the global econiomy.

That is now drying up and will result in a series of bursting bubbles planet wide. Commodities, Housing, Bonds, Currency positions and hedges will all lose a bit of steam and froth.

The GOOD new as I see it in Ireland is that the FTB market was driven for the past 2 years by FEAR, the fear that if they did not buy for a ridiculous price of x in 2004 the price would be a more ridiculous x+10% in 2005 and so on.

Do any of you observers agree with me that a lot (not all) of this fear has gone out of the equation in Ireland in that past 2 months and that pure rationality is returning to the FTB market ???
 
Howitzer said:
I doubt there's been much carry trade into the Irish market.
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*lol*

Howitzer said:
Care to elaborate?
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2Pack explained it well - it's essentially another nail in the coffin of the global liquidity bubble. It will further encourage global central banks participating in tightening monetary policy cycles, and will eventual filter down to Irish FTBs by eating into the amount they can borrow from the mortgage banks. (as well as hurting recent buyers with increased payments, particularly those whose teaser/introductory rates are coming to an end and resetting).
 
irish property investors were/re borrowing money at ultra cheap real rates, im sure there was some currency risk with borrowing yen so euro would be more relevant here,when interest rates dropped to 2% it made total sense to buy a second or third property with real negative/zero interest rates and house prices rising by 10% a year,but now the cost of finance is rising and i think a lot of these amateur prperty investors will seek to cash in.
 
2Pack said:
The carry trade can be explained this way.
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Another good description about it here & possible ramifications:
[broken link removed]


2Pack said:
Do any of you observers agree with me that a lot (not all) of this fear has gone out of the equation in Ireland in that past 2 months and that pure rationality is returning to the FTB market ???
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No, not quite yet. I know of 2 recent FTBs and they're both still going on about "rent is dead money", "prices will never fall", "need to get on the ladder now", blah, blah, blah, I don't even try to argue the point anymore for fear of bursting the fantasy bubble they are living in. Let them at least enjoy the initial high of "owning your own home" before reality bites.
 
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have to agree with you ivuernis , i myself have actually given up discussing this issue with friends for three reasons:

1: when it comes i wont be able to resist saying "i told you so"
2: they still quote demographics , prices going up , up , up and rent is dead money etc
3: the one's that do listen and partake in the discussion rationally begin to get a slightly bitter taste in their mouths as they realise reality could come crashing down around them badly
 

Ditto all of the above. I've long given up on discussing these matters with friends they are all aware of my position at this stage.

Interestingly though there is an almost daily appearance in the general media of articles questioning the bubble.

Anecdotal it may be but i have definately noticed an increased sentiment amongst my own peers that are finally beginning to recognise the potential for problems even if they still refuse to believe it.
 
A lot of people listened years ago when they were told that the market would fall and .. . . .they missed out big time. I think that regret is driving the current sentiment, they don't want to lose out completely if it keeps going up, and also fear that if it does keep going up, they will be priced out altogether.

If you are telling FTBs (for instance couples who may want to start a family) not to buy, are you also willing to tell them how long it will be before the market goes up a bit more and then falls back to a level they can afford. Because they will be waiting until then to have a family home.
 

I would never advise anyone to not buy. If they have reached maturity they should be able to make their own reasoned decision.
 
annR said:
A lot of people listened years ago when they were told that the market would fall
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The fundamentals were still wrong back then. The only reason the market didn't level off was government intervention. The market should have levelled off and in a well (responsibly) managed economy it would have levelled off. Alas instead the goverment (and the banks) provided stimulus to the market. Now IMHO the market has been over-skewed and will drop rather than level off. This has happened all over the world in similar circumstances. It will happen here. If anyone wishes to bet with me on the matter I am willing to engage
 
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