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Realistbear

Eurozone Headed Toward 3.5% According To Institutions

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http://thebusinessonline.com/Stories.aspx?...2E-D07EB5AA1CEE

Euro zone interest rates to reach 3%

By Allister Heath

14 May 2006

INTEREST rates are set to increase to 3% in the euro zone this year, despite disappointing growth in Germany, a poll of economists will warn on Monday.
Some institutions believe euro-zone rates could be hiked to as much as 3.5%
by the end of the year, the Ideaglobal survey also said. The European Central Bank’s (ECB) refi rate is currently at 2.5%.

:o

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Well the Irish will be glad that they have such a strong housing market.

They shouldn't have any problems with their monthly repayments going up 50 to 75%.

Or could it be that many fools are about to begin to understand what the good folk from "The Economist" have been trying to tell them for years...

Edited by BandWagon

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Well the Irish will be glad that they have such a strong housing market.

They shouldn't have any problems with their monthly repayments going up 50 to 75%.

Or could it be that many fools are about to begin to understand what the good folk from "The Economist" have been trying to tell them for years...

But can't they release the equity locked up in their home and use it to pay the increased mortgage payments?

Billy Shears

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But can't they release the equity locked up in their home and use it to pay the increased mortgage payments?

Billy Shears

That's an interesting question/proposition.

I'm not sure how MEW works, but surely a valuation would need to be carried out to withdraw equity. The banks may not be keen to release equity on a falling asset?

NDL

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But can't they release the equity locked up in their home and use it to pay the increased mortgage payments?

Billy Shears

if you're really old you might remember Harry Worth. He did sketch where he'd been called in to see his bank manager about his overdraft. Harry's answer was to offer to write out a cheque for him.

I made me laugh when I was about 10 years old. Early '70s I'd guess.

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Guest Bart of Darkness

if you're really old you might remember Harry Worth. He did sketch where he'd been called in to see his bank manager about his overdraft. Harry's answer was to offer to write out a cheque for him.

I made me laugh when I was about 10 years old. Early '70s I'd guess.

I used to watch those shows as well.

I'd say you were spot on with the date, must have been pre-1975 at least.

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That's an interesting question/proposition.

I'm not sure how MEW works, but surely a valuation would need to be carried out to withdraw equity. The banks may not be keen to release equity on a falling asset?

NDL

Erm, this was a joke. They will have to pay interest on the MEWed amount. Borrowing more money because you can't afford to pay the interest on the debt you already have was meant to be a plainly ridiculous suggestion.

Billy Shears

Edited by BillyShears

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Erm, this was a joke. They will have to pay interest on the MEWed amount. Borrowing more money because you can't afford to pay the interest on the debt you already have was meant to be a plainly ridiculous suggestion.

Billy Shears

Ridiculous it is but haven't many being doing just that? Borrowing to pay off debt? The TV bombards us with ads to "consolidate" our loans in one quick and easy payment etc. As HPI is not generating useable income you have to generate wealth to pay for spending habits and borrowing is the way it is done in Gordon's "Miracle Economy." When you think about it, how else could the UK have the world's most expensive housing and the largest consumption of champagnbe per capita? Its how we have accumulated 1.2 trillion pounds of debt--borrowing to pay debt.

Edited by Realistbear

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Erm, this was a joke. They will have to pay interest on the MEWed amount. Borrowing more money because you can't afford to pay the interest on the debt you already have was meant to be a plainly ridiculous suggestion.

Billy Shears

No, you could be onto something here.

Just like in the States where they have negative amortization loans. ie don't pay all the interest, because the house goes up in price, and you can use that to pay the debt when you sell.

The Irish could do the same. As long as house prices keep going up (which of course they always do in Ireland), they can borrow against the value of the property, and use this to pay their ever increasing interest burden.

Of course banks would have to relax lending criteria, so instead of lending 10 times salary, they could lend against FUTURE house price growth.

That's the REALLY clever part.

Say someone could borrow to buy that 3 bed terrace in Dublin that's currently worth 800k. Now of course house prices only ever go up in Ireland.

In 2 years the place will be worth 1 mil.

Because house prices only ever go up, the bank can lend 200k against the future price, which the owner can then use to pay the interest on the loan, which they otherwise couldn't afford.

And for the bank there isn't any risk, all they have to do is lend someone else 1 mil to buy the same house in 2 years, and hey, their loan is secure.

The property will definitely be worth a mil in 2 years because they'll say so with their money.

Absolutely brilliant, I'm surprised some enterprising Irish bank hasn't already thought this one up.

Jeffrey Skilling would be proud.

Edited by BandWagon

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Ridiculous it is but haven't many being doing just that? Borrowing to pay off debt? The TV bombards us with ads to "consolidate" our loans in one quick and easy payment etc. As HPI is not generating useable income you have to generate wealth to pay for spending habits and borrowing is the way it is done in Gordon's "Miracle Economy." When you think about it, how else could the UK have the world's most expensive housing and the largest consumption of champagnbe per capita? Its how we have accumulated 1.2 trillion pounds of debt--borrowing to pay debt.

Spot on.

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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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