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gruffydd

Euroland Interest Rates To Rise Again Very Soon

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Interest-rate hike on the way sooner than expected

08 January 2006 By Eamon Quinn (Sunday Business Post)

Economists are predicting that interest rates will rise more quickly and sooner than expected amid signs that an economic recovery in Germany is gathering pace.

They predict that the European Central Bank (ECB) will move to raise rates again, just weeks after sanctioning the first interest rate rise in five years.

The bank's governing council meets on Thursday in Frankfurt for its first gathering this year. A raft of economic figures, including lower-than-expected German jobless numbers and EU economic sentiment surveys, suggest the bank will prepare to raise rates again in the next two months.

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Most people in Europe take fixed rates loans so it will not hurt much if rates do go up !

You can bet the pound will go down as IR's in europe and USA go up

Music to my ears this is

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Irish house price crash on the cards?

Each .25% rise, increases the AVERAGE mortgage by over €80 per month. How many rises will it take?

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Ive got a mate in Dublin with a 300k euro mortgage (thats on 2 properties, a BTL in UK and his Dublin house).

His mortgage is over 40years, and I remember he said the interest rate is 2.75% - so I hope for his sake this is fixed rate for the life of the mortgage.

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Ive got a mate in Dublin with a 300k euro mortgage (thats on 2 properties, a BTL in UK and his Dublin house).

His mortgage is over 40years, and I remember he said the interest rate is 2.75% - so I hope for his sake this is fixed rate for the life of the mortgage.

40 year morgage - no wonder the market is buggered if the lenders are just going to write their own rules.

Im going to invent a morgage called 'Dependants morgage'. I dont have to pay it but any kids i have will have to bear the brunt of it.

Imagine having to pay for 40 years to live ina house. Only half your life. That is a CRIME!!

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Ive got a mate in Dublin with a 300k euro mortgage (thats on 2 properties, a BTL in UK and his Dublin house).

His mortgage is over 40years, and I remember he said the interest rate is 2.75% - so I hope for his sake this is fixed rate for the life of the mortgage.

There is no such thing as a fixed rate mortgage in Ireland - property is the only investment and interest rates are not going to increase! That was what I got from my Christmas break back in Ireland. If you don't have at least 2 properties you're an absolute muppet. From what I could see all new developments were empty and have been for some time. One fabulous apartment block in my local town has been one the market for over a year. Initially the asking price for one of the apartments was 500k! now even at 375K none of the 20 apartments are sold - the lights are on but there's nobody home.

A friend has 2 interest only mortgages totalling 400k (he earns around 40k p.a.) and said that if interest rates go up 1% he is b@lloxed!! I was just amazed at the stupidity of what I was hearing everywhere and if you open your mouth your laughed at - it's not going to be pretty....

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i wore a pink tshirt in ireland (south though) and was also laughed at.

So i couldnt be bothered arguing house prices.

Although, all my friends out there are building their own houses. Will be good to keep an eye on them to see how they get on...

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classic bubble chat.

change the word "property" for "tech shares". Oddly reminiscent of 1999 when I was working at a stockbrokers.

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There is no such thing as a fixed rate mortgage in Ireland - property is the only investment and interest rates are not going to increase! That was what I got from my Christmas break back in Ireland. If you don't have at least 2 properties you're an absolute muppet. From what I could see all new developments were empty and have been for some time. One fabulous apartment block in my local town has been one the market for over a year. Initially the asking price for one of the apartments was 500k! now even at 375K none of the 20 apartments are sold - the lights are on but there's nobody home.

A friend has 2 interest only mortgages totalling 400k (he earns around 40k p.a.) and said that if interest rates go up 1% he is b@lloxed!! I was just amazed at the stupidity of what I was hearing everywhere and if you open your mouth your laughed at - it's not going to be pretty....

I agree. The Irish optimism just continues to amaze me. A few months ago I went down to the bar with one of my good Irish mates. We arrived early and had a pint togther. I quizzed him on the housing madness. He told me that everything was okay, but if it all went t**s up that wouldn't be a problem because Ireland's economy has always been a basket case :blink: I suppose enjoy the good times while they're here :o

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You just have to look at the increases in NI to see the irish mania is starting to effect prices north of the border. I wonder how much the EU morgages are causing inflating/stagnating uk prices. The more the EU increases there IR and IRS start to line up, foreign BTlers are going to start thinking about keeping out of UK market...

Looking at boards several of the new blocks of flats in worcester are funded by irish investors! one is funded by an irish bank!

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You just have to look at the increases in NI to see the irish mania is starting to effect prices north of the border. I wonder how much the EU morgages are causing inflating/stagnating uk prices.

I think you may have a point there, but it's difficult to get exact figures on it.

By the way, don't forget that NI is in the UK.

Edited by karhu

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I agree. The Irish optimism just continues to amaze me. A few months ago I went down to the bar with one of my good Irish mates. We arrived early and had a pint togther. I quizzed him on the housing madness. He told me that everything was okay, but if it all went t**s up that wouldn't be a problem because Ireland's economy has always been a basket case :blink: I suppose enjoy the good times while they're here :o

I'm one of the better earners among my group but am one of the few who has not bought property over the last 5 years. I finished college in 2001 and I guess I could have bought something after that but even then I felt property was overvalued. I haven't changed my opinion of that and although you could say that I lost out on 3 years or so of rising property values I would have had to lie to buy at the time and I was not prepared to do that. Many of my friends have bought, mainly through mortgage brokers who help smooth the numbers for the banks so that the loans are granted. You would not believe some of the tricks they get up to. Out of date pay slips. Increased valuations on properties so as the loan will cover the deposit. (This is illegal by the way but when I questioned the people involved I was told, "hey what’s the problem, the house is going to be worth that soon anyway". Many of my friends have already withdrawn equity and are not living the dream, new cars, out on the town 3-4 nights a week, 2 sun holidays a year etc etc....

If people in the UK think that the BBC and other VI agencies talk up the market just a bit, they should come to Eire for a while. It is a constant barrage of spin, hype and cajoling for the property market. I have tried to have polite debate and conversations of a possible crash in house prices but it caused too many arguments and I would have alienated myself from our group if I kept it up. I know refuse to be drawn on any discussion about the market and quickly change the subject.

Irelands economy has come a long way in the last 10 years. This economic miracle was made off the back of getting multinational manufacturing companies to relocate to Ireland and benefit from our low cost base, (this is now a thing of the past) and educated work force. Over the past year we have lost thousands of jobs in Manufacturing as these companies move to Asia or Eastern Europe where wages are lower. Our economy has continued to create more jobs but these have mainly been in the Building sector and retail. These are both linked as everyone knows. My big question is, what happens when we have enough houses and the 16% of our workforce that is employed in this industry have doubts about their jobs.

Rant over for now.

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:):):)

The experience in Ireland has to be seen in the context of a BOOMING economy with an underdeveloped financial culture.

The Irish economy did really very, very well in 1988 - 1998. It took average Irish income from the bottom of the league of developed nations to a position above England.

This is a bit of a con, though, because the age structure of the population is very funny - something to do with emigration up to 20 years ago and large, large families up until 20 years ago, and now family size nearly down to the European norm. The result is that, compared to say France or the UK:

1) There are very few old people to support compared to the population of working age (they emigrated); and

2) There are not many children to support given how many people there are in their 20s and 30s.

The boom has completely revolutionized attitudes and expectations in Ireland. Dad was a subsistence farmer (£ 15K including all subsidies), son is a computer programmer (£ 45K plus pension) or has opened a delicatessen (similar) or is a plumber (similar, but perhaps more cyclical).

However, attitudes to investment and risk are not as sophisticated as they should be. For long years the only respectable investment in Ireland was land, and that mindset continues. The Dublin stockmarket is dodgy (well - small, volatile and prone to insider influence). The London stockmarket is foreign and harder to reach. The Irish life insurers and banks are nationalistic small-timers.

The result is that the new-found wealth, which could have been prudently spread around the world in unit-trusts / mutual funds investing in a variety of different assets has been over-concentrated in housing.

This has held up for a long time because the boom sucked in more workers (mostly returning emigres with good skills). At one time one Dublin suburb grew by 80,000 people in six years and the sewerage system was overwhelmed.

The boom is now slackening - Ireland is no longer cheap - and it is all going to get very nasty indeed.

:):):)

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Speaking of the Dublin Stock Market, Ireland's largest Bank, AIB, which is also Irelands largest corporate entity by Market cap, is trading near it's all time-high.

I believe AIB is very exposed to property in Ireland and the UK.

Anyone care to comment on the chart from a technical perspective ?

I'm thinking about in/out short positions in 2006 as ECB rates rise

http://uk.finance.yahoo.com/q/bc?s=AIB.IR&...l=on&z=m&q=l&c=

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Two very good and interesting posts from oilman and LondonBuyer. Thanks for sharing your views - they are very much in line with the discussions I have had.

I feel that Ireland will suffer long and hard for allowing the multinationals to have such control over the views of their population.

The is one question that I still haven't had answered yet. The EU has had a major impact on the wealth and infrastructure of Ireland. If Ireland does suffer and economic catastrophe will the EU be there to bail it out? Is this part of the Irish mentality?

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Two very good and interesting posts from oilman and LondonBuyer. Thanks for sharing your views - they are very much in line with the discussions I have had.

I feel that Ireland will suffer long and hard for allowing the multinationals to have such control over the views of their population.

The is one question that I still haven't had answered yet. The EU has had a major impact on the wealth and infrastructure of Ireland. If Ireland does suffer and economic catastrophe will the EU be there to bail it out? Is this part of the Irish mentality?

I personally do not think the EU should be under any obligations to bail Ireland out of an economic disaster should the multinational companies decide to move to lower wage countries in order to boost profits.

I put the blame firmly on the door of the government. The government has done nothing to stop the massive HPI that has occurred and why would they when they are making Thousands of € out of every single housing transaction in stamp duty. Stamp duty is a percentage of what the house is worth so the higher the house price the more money for them.

Several groups such as the IMF and the ERSI have told the government to immediately begin taking money out of the market to try and cool it. They could do this by a number of ways.

1. Abolish mortgage relief. Why should someone who makes the decision to buy property get tax breaks?

2. Increase capital gains tax on 2nd properties to 75%. This should help scare off the speculators and allow FTB some chance.

3. Abolish stamp duty for 1st time buyers and increase it for persons buying second home/investment properties.

Although the government knew that Ireland was short on housing over the last 10 years due to people no longer immigrating to the US etc and instead staying at home to work, they did nothing to stop BTL landlords and Speculators ramping up the house prices on FTBs.

However in my view, this year could be the turning point for the property market in Ireland. The ECB raising interest rates has come as quiet a shock for most punters on the street as the general consensus in banks and other money lending institutions here was that interest rates would stay the same or maybe even come down. It will be a hell of a shock to most homeowners when rates hit 3% by the end of the year.

I firmly believe that the construction industry will overshoot the amount of houses needed. If over supply and increased borrowing costs hit the market at around about the same time that jobs are being lost by multinationals packing up and leaving.........It will be no laughing matter.

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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