Increase in House Repossessions, are borrowers sufficiently warned about risk?
- Thread starter whathome
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jimbob1234
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the ECB are a load of muppets. rising rates in this kind of economic climate is madness. they will drive us into a massive recession if they keep raising. trichet says that rates at 4.25 will help fight inflation. rubbish
Because some people who read that and similar (US focused) books come away with the impression that buying property discounted through executors' sales is some sort of get rich quick scheme.
starlite68
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a friend of mine who works for one of the big banks says she has noticed a rise in people asking to change their mortgage to "intrest only"until tings pick up.
surely that cant be smart?
surely that cant be smart?
As with anything there are pros and cons. For example it reduces the monthly outgoings but does mean that the capital will remain static for the interest only period thus increasing the long term cost of the loan. And one may require modified (e.g. level term) mortgage protection life assurance to cover this situation. Of course some (many?) lenders may be unwilling to switch to interest only for some (many?) owner occupiers right now. Presumably they assess such applications on a case by case basis?
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jimbob1234
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moving to interest only is a very risky move. its better than losing your home i suppose
Jiimbob i don't think the Irish situation reallys has any influence whatsoever on Trichets thinking remember our economy is very minor in comparison with the real big players like the Germans and French, for years the ECB interest rate was low to encourage those same economies to grow after years of slow economic development, this has worked and created the property boom in this country and helped the Germany economy to grow in line with expectation, Trichets main focus is to control this growth now and his only real choice is to increase interest rates in the EuroZone, remember by buying the ticket for single euro currency we have to take the ride and by god we are in for a bumpy one!!!
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jimbob1234
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im aware of that but with a credit crunch all over the world and growth slowing in germany etc. rates should not be risen. if he rises on thursday then oil will hit 150 , gold will hit 1000, EUR/USD will break 1.60 and then we are going to see higher inflation here again
Not an expert on economy policy and what strategies and thinking that are adopted prior to increasing rates, surely they factor all these things in (oil, food prices etc) prior to decision, but the over-riding factor that because common currency is still relatively new, the kind of scenario we are in at the moment is inevitable when you have a serious of member countries economies all developing at different levels, it being the case until there is unison we are always going to be a hostage to the likes of the german economy!
Oil at USD 150 and an exchange rate of 1.60 would be cheaper to eurozone buyers than it is now.
Also, the markets have priced in the rate rise with a high probability, so I don't know where you're getting 1.60 from. Sure you'ld make a killing on the currency markets with that info otherwise.
The ECB was set up with one goal, to control inflation. It has done that job well and if inflation is now rising, it has no option but to increase rates again. Irish mortgage holders might not like it but if they did not factor a rise in interest rates to, historically relatively low values of 5%, then that was their mistake. Look elsewhere for the muppets.
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jimbob1234
Guest
you dont know where i got 1.60 from? do you follow the foreign exchange markets, thats the euros high that was achieved during the bear sterns panic.
diarmuid c - your point is a good one. the ECb was setup to battle inflation where as the us FED has two jobs, battle inflation and encourage growth so trichet will rise and rise again
Also, inflation hits 4%: http://www.rte.ie/business/2008/0630/eurozone.html
Don't think they'll be stopping at one rise.
Don't think they'll be stopping at one rise.
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jimbob1234
Guest
how can it b fully priced in if its not definite that its going to happen yet
Thats how the market works. They price in what they expect from the Central Banks. Trichet pretty much announced the rise last month and the market priced it in. Check the futures market if you want confirmation
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jimbob1234
Guest
ill bet you that if ecb raises thursday then we will see dollar fall below 1.60
Also, inflation hits 4%: http://www.rte.ie/business/2008/0630/eurozone.html
Don't think they'll be stopping at one rise.
Is there a chance the ECB might announce a half point increase this week rather than a couple of staggered quarter point moves.
We have been prepped for a quarter point change this month, but that was before the 4% inflation figure surfaced.