Can I borrow in Yen/ CHF

Anyone know anyone who has ever taken a mortgage or a loan out in Yen. I realise that over the long term you are basically making a bet on currency but I’d like to look into it, even if it’s just for a point of interest regarding economic growth forcasts for the euro zone v the japanese zone.

You are making a bet over the short term as well. Your repayments would be in Yen. So a 20% appreciation in the Yen would lead to a 20% increase in repayments. I would suggest this rarely makes sense.

Always approach this (and any investment question) the way a professional would. Start with you riskless position. That is matching you liability to you asset - A Euro mortgage. Then you look at ways you can take risk which would lead to an expected return. Shorting the Euro isn’t one of them. What you are suggesting is ***exactly ***the same as:

Take your mortgate in Euros.
Sell futures on the Euro/Yen exchange rate to the value of your mortgage (hundreds of thousands of Euro?).

It doesn’t sound so attractive now I would imagine.

I’d say half of New Zealand is mortgaged via the BoJ.

I doubt if you could take out a mortgage in Japan on a property in Ireland but there are investment products that would let you place that bet.

Well, it would have made sense over the last 5 years at least . Believe me I know. Getting paid in Yen means I’m earning significantly less than when I arrived despite annual increases :frowning:

uk.ichart.yahoo.com/z?s=EURJPY=X&t=5y

It looks to have reached the bottom though. I wonder is it just following the dollar or something more substantial in the economy. Anecdotally, just based on my own encounters on the way to work, there is a fair amount of construction (apartment blocks, new shopping centers, etc) going on in Tokyo.

All we need is a time machine so. :wink:

It is possible to take out your mortgage as a foreign currency debt. I know people who have done this.

If you do, ensure you have the facility to switch currencies during each year at no or little penalty.

Blue Horseshoe

I believe that in other European countries it is possible to get good fixed rate mortgages for the entire term of the mortgage. Is there any reason why an Irish person could not take out a fixed rate mortgage in Belgium for example? Could be a good way to get a manageable mortgage without a currency risk.

8.5% interest vs 0.5% interest. Hmmmm

The reasons traditionally given by Irish banks for not offering fixed rate loans for the duration are a) there is no demand for such a product beacuse b) Irish people like the flexibility of moving or clearing their mortgage early.

So basically the banks don’t want to structure debts in that way, so make it difficult for Biddy and Mick Public to get them. That said, EU legislation coming down the line will make it easier for people in one state to take out a loan from a lender in another.

Blue Horseshoe