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Would A Country Losing It's Aaa Rating Result In Higher Mortgage Rates?


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Apologies if this is a dumb question but google wasn't particularly my friend when i tried to find a correlation between national borrowing costs and an individuals.

One would logically expect an inverted correlation between lower credit ratings and higher mortgage rates, but there are other factors at play which could distort things. I do not think that a AA- credit rating has forced mortgage rates up in Japan or even raised the country's cost of borrowing.

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Apologies if this is a dumb question but google wasn't particularly my friend when i tried to find a correlation between national borrowing costs and an individuals.

some of the existing mortgages are tied to the BofE rate trackers ofc but some svr rates say they won't go more than 2% above BofE rates new mortgage rates may go up.

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One would logically expect an inverted correlation between lower credit ratings and higher mortgage rates, but there are other factors at play which could distort things. I do not think that a AA- credit rating has forced mortgage rates up in Japan or even raised the country's cost of borrowing.

One would indeed expect rates to rise if the banks credit rating falls. And so long as governments are expected to backstop their banks, a country's credit rating feeds through.

I suspect the key difference in Japan is the internal source of bank finance (japanese savers), and the ever-rising currency. OTOH, that should work for Italy too, if markets were rational :huh:

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http://www.clivemaund.com/article.php?art_id=68

If the PM sector is signaling a major deflationary episide, then we should see signs of topping action in the broad stockmarket, and we do. A large Head-and-Shoulders top is completing in the S&P500 index, and with the index high in the Right Shoulder we are believed to be at an excellent point go short, buy bear ETFs etc, which we will be reviewing on the site shortly. One leading market commentator who actually has a very good track record recently said that the markets will continue higher "because people are going to continue getting up in the morning and going out to work in order to buy stuff for themselves and their families". Oh, is that right? - try telling that to the 50% of Spanish youth who are out of work and can't find it no matter how hard they try BECAUSE THE JOBS DON'T EXIST due to the economy of Spain being ravaged by deflation, aggravated by the bursting of a huge property bubble - and what about American workers in the early 30's? - they didn't go around asking "buddy can you spare a dime?" because they were lazy ****ers - they were likewise the victims of deflation. This same writer portrayed the 2008 market meltdown as a "once in a lifetime event", implying that everything´s OK now and that "the great bull will climb the wall of worry". That might be so if the problems exposed by the 2008 financial crisis had been properly dealt with, but they weren't, they were simply "swept under the rug" - papered over with more of the stuff that created the problems in the first place - debt and derivatives - which means that the forces of deflation have now built up to staggering proportions - the lamed zombie banks, who exist now only to line the pockets of their elite executives and sluice fuinds in the direction of favored politicians, and governments nursing monumental debt overhangs are now powerless in the face of the oncoming deflationary train wreck. The final denouement will be when bond markets crash and interest rates skyrocket - that´s when creditors will finally get the message that they are not going to get a penny back. One big reason for the current procrastination is that big private creditors are scrambling to use the current window of opportunity to offload as much bad paper as possible onto governments and thus the taxpayer before the final collapse.
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