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karhu

It's All Over.....

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http://today.reuters.co.uk/investing/finan...NE-UPDATE-2.XML

That, coupled with a European Commission report of economic confidence hitting a five-year high, tilted opinion among some economists in favour of twice as big a rate increase as they had been betting on for June -- 50 instead of 25 basis points.

Big interest rate adjustments are coming in the Eurozone. This is a nightmare for homeowners on variable rate mortagages, especially since interest rates have been so low.

Ireland could be a different place by December.

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Thank you, thank you, thank you

USA, Ireland and Spain at full crash cruise speed by the Autumn. I doubt the UK will get off lightly once sentiment starts to get very bearish worldwide.

The tide has turned. The press and gossip are turning against the housing market.

HPC will start this year and continue thoughout 2007. By that time, we'll have read and heard some real horror stories as the ludicrous mortgages and extreme gearing unwind.

Edited by karhu

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Just to put this in perspective this would be a 20% hike in interest rates - essentially overnight.

Say you had a 25 year repayment mortgage of 300,000 EUR.

Repayments at 2.5%: 1356.89 EUR

Repayments at 3.0%: 1435.89 EUR

You're almost 100 EUR worse off, essentially overnight.

On an interest only mortgage you'd be 125 EUR worse off.

And where does the BTLer find this extra money from? Yields are already marginal. The interest rate rises will also affect credit card/loan payments, so tenants will be poorer and not able to pay more in rent. In fact, if anything, rents may have to fall.

Edited by karhu

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Just to put this in perspective this would be a 20% hike in interest rates - essentially overnight.

Say you had a 25 year repayment mortgage of 300,000 EUR.

Repayments at 2.5%: 1356.89 EUR

Repayments at 3.0%: 1435.89 EUR

You're almost 100 EUR worse off, essentially overnight.

On an interest only mortgage you'd be 125 EUR worse off.

And where does the BTLer find this extra money from? Yields are already marginal. The interest rate rises will also affect credit card/loan payments, so tenants will be poorer and not able to pay more in rent. In fact, if anything, rents may have to fall.

do those repayments include bank margins of 1+%?

i heard there was only a 35% probability of an increase priced into amrket yesterday.

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do those repayments include bank margins of 1+%?

i heard there was only a 35% probability of an increase priced into amrket yesterday.

No I didn't include bank margins for simplicity.

Yes, the possibility seems to be less than 50%, but is increasing by the day. It's sure to start affecting EUR:GBP soon. If I were on the limit of affordability with a 300K EUR mortgage, I'd be sweating with a 10% chance, never mind 35%.

It also makes a psychological point that the central bank is not fully in control of inlfation and IMO that means they're going to go up more steeply that they would have needed to if they'd have put interest rates up earlier.

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everyone knows rates are heading for 3.5-4% its just a matter of the speed of that rise,but yes physchologically it may be important but again everyone knows that the ecb will do everything in its power to control inflation yet markets dont seem to think it will have a probalem in doing this with currnet interest rate expectations.remember ecb rates have been ultra low for a few years and still inflation hasnt bitten which is largely due to stronger euro.if euro continues to strengten against dollar over next few years. inflation will be less of a problem.

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everyone knows rates are heading for 3.5-4% its just a matter of the speed of that rise,but yes physchologically it may be important but again everyone knows that the ecb will do everything in its power to control inflation yet markets dont seem to think it will have a probalem in doing this with currnet interest rate expectations.remember ecb rates have been ultra low for a few years and still inflation hasnt bitten which is largely due to stronger euro.if euro continues to strengten against dollar over next few years. inflation will be less of a problem.

Good points, R.

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The market is not expecting a 0.5 rise at all. One economist believes there's a 35% chance-which means, on any interpretation, it's unlikely to happen. :angry:

Having wrong-footed the market in April by virtually ruling out a May rate hike, the ECB now faces a dilemma of its own making," Bank of America economist Holger Schmieding said.

He was betting on the ECB holding fire in May but said that he believed there was now a 35 percent chance of it plumping for a half-percentage point rise in June.

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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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