Holy Sh1tFu(K my mortgage!!!!! beans and toast from now on

Current rumblings from the ECB.
The German bloke in the ECB has commented that rate rises have not stopped

Rates to rise another.5% before the end of the year?

How will that impact on yields and buyer confidence?

:cry: :cry: :cry: :cry: :cry: :cry: :cry:

0.25% is already pencilled in for June and a second hike is well signalled before the end of the year for a while now.

Exactly, and given that the prospect of a Fed rate cut has receded significantly, I think the real question is whether we get another 0.75% or even 1% by year-end, rather than just 0.5%.

As for 2008, my thinking is this - rates don’t need to be just reset to neutral, they need to be tightened to pinch off significant M3 growth. If neutral is 4.5%, then 5% is probably the very least we’ll see in this cycle of rate hikes, 5.5% is a distinct possibility and I wouldn’t exactly rule out 6% either if HCIP starts to get a little hairy.


6%= extra €350pcm
:open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth: :open_mouth:

Sorry if I scared ya! :blush:

I’m not saying it’s a likely scenario - just that it is plausible if Euro inflation were to take off. And more so than the Fed or the MPC in the UK, these ECB guys are pretty darn serious about inflation.

The Fed position is very interesting, as the market has moved from I’d say an 80% expectation of a cut to a 50/50. If the Fed god forbid raises rates (and I can see a scenario where this occurs, still unlikely but not very unlikely) all hell will break loose as the differential between Fed and ECB rates widen even further,

Do you mean 350 Euros on top of the increases that have already happened?

My understanding was that for ever .25% increase, people had to fork out an extra 15 Euros per 100K that they had borrowed. So assuming that someone has borrowed 300K, this would equate to 16*45 = 720 Euros pcm (assuming we start with a base rate of 2%). Maybe someone can correct me on this.

i was working on €40 every .25%
my mortgage is €200k

but yea, right idea.

I intrest rates to go above 5%, then beans become an unnessesary luxury.
If it reaches 6% then the toast is gone and bread and cold water it is…


The brother-in-law in New York reckons the Fed are scared stiff of dropping rates as it will allow a lot of people to “re-fi” their mortgages, onto which a large number of them might add the term “cash-out”. The Fed might do better by allowing their housing bust to continue to reduce homeowners equity before they cut, thus limiting the extent of the cash-out re-fi’s.

2% under social partnership from the 1st June…

Lovely jubbly! Those public sector folks won’t fill the pinch of Trichet yet!!! 8) :wink:

The outlook for Euro interest rates is getting more ominous by the day.
Analysts are beginning to pencil in a rise in september followed by another in december.
Trichet himself expects inflation to pick up again towards the end of the year and analysts are starting to predict Euro inflation of 2.2% going into 2008 inspite of rate rises.
The dollar may strenghten back up towards 1.27 to the euro.
A big factor thats emerging is that food inflation is set to soar as world wheat stocks are at an all time low and combined with a poor planting season in the U.S. and corn being diverted into ethanol production, wheat prices are set to rocket.
Also the upswing in Germany is continuing apace with confidence indicators near an all time high and growth rates continuously being upgraded.
It now appears that rates are going to be raised well into 2008 and the risk is very much on the upside.

And what happens to the dollar once the cut arrives?

The cut may never arrive any time soon :open_mouth:

The Fed are caught. If the US economy tanks, they will want to cut. A cut however would see inflation rise, possibly by a large amount. Then the Fed has conflicting priorities - controlling inflation and encouraging growth.

The last time this happened was in the late 60s early 70s and they cut. Inflation went into double digits and it took Volcker all but killing the economy to bring inflation down. I can’t see them making the same mistake.

What cut?
Forget about a cut:
bloomberg.com/apps/news?pid= … refer=home


Another view that we’ll see 4.5% before year end…


Regarding the US refi issue, there is less correlation between the FED rate, (Discount rate), and the Residential mortgage rates than in Europe. The Discount Rate is the interest rate the Federal Reserve Banks charge depository institutions on overnight loans. It is an administered rate, set by the Federal Reserve Banks, rather than a market rate of interest. The primary conventional mortgage rate is a market-determined interest rate for long-term residential mortgage loans. A change in the short-term discount rate may not affect interest rates on long-term mortgages. SO whether the rates go up or down slightly won’t have a huge affect on the downward pricing pressure.

While most Americans still feel more comfortable in a 30 year fixed loan. There is a whole range of hero loan products, the option arms, being the most extreme, whereby you have the option of paying 4 amount every month, a 1% payment whereby the amount you underpay is added to the amount of the loan, Interest Only payment & 15 & 30 amortising payment. There is also a 2 year fixed products. After a defined period these mortgage payments just keep on adjusting higher until a cap is reached. These mortgages will have to be refinanced irrespective of current rates due to the prohibitive adjusted rates. There are also other factors such as credit scores, LTVs, appraised values, comparables etc. which may prevent House Owners from being able to refinance in a falling market.
Most Americans with second properties will let these go into foreclosure voluntarily as they are generally highly leveraged, (up to 100% LTV) rarely pay for themselves and are decreasing in value, when these go into foreclosure, the banks have to sell cheaply and quickly as they cannot hold the property as an asset on their balance sheet. This in turn will reduce the value of neighbouring property due to the comparable method of calculating house prices and the downward spiral continues. There’s still a long way to go before we reach the bottom of the US market housing market as over a million option arms or adjustable loans with teaser rates are due to adjust over the next 12 months.

There are similarities between Ireland & the US up to late 2005 in the less than stringent lending criteria, overly positive sentiment towards property and arrogance regarding a perception that their economy is unique along with their ‘fundamentals’ that would lead you to believe that Ireland is probably about 15 months behind.

p.s. light molasses and brown sugar will improve those bakes beans no end.