interest rates.

berliner

If you were buying property now,which interest rate would you opt for?

homer911

The lowest??

berliner

homer911 wrote: »

The lowest??

Oh dear..well at least you tried.Guess i'm in the wrong place for the answer i'm seeking.

kenco

I would split and go with some fixed (maybe 50%) and let the other float on an ECB tracker. ECB is under pressure to cut but so far hasnt. If the global situation continues (e.g. dollar weakness, etc) then they will have to cut before year end (poss more than once). Unlikely rates will go up in the short term.

Hedge your bets and commit to making a set repayment for the first 12 months based on the rates for day 1. If the rates drop then overpay against the capital of the loan for that time, then after 12 months review and if rates look like they will remain steady, readjust your repayments.

portomar

kenco wrote: »

I would split and go with some fixed (maybe 50%) and let the other float on an ECB tracker. ECB is under pressure to cut but so far hasnt. If the global situation continues (e.g. dollar weakness, etc) then they will have to cut before year end (poss more than once). Unlikely rates will go up in the short term.

Hedge your bets and commit to making a set repayment for the first 12 months based on the rates for day 1. If the rates drop then overpay against the capital of the loan for that time, then after 12 months review and if rates look like they will remain steady, readjust your repayments.

poppycock. the ecb has a mandate for fighting inflation, not boosting its currency, or (like the us fed) promoting growth. they talk about the need for a strong dollar but i cant see them cutting rates to reverse an exchange rate. they will cut rates if inflation falls, unlikely.

id go for 50% fixed if i could do it.

berliner

Still haven't reached a decision but I believe the ECB will cut rates so a tracker seems like a good bet.Whaddy reckon??

daveirl

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portomar

glad to see youre with me on this dave

daveirl

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berliner

daveirl wrote: »

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read a lot of articles and everything points to a cut.i'd be 80% confident of a cut by the middle of the year.

ircoha

the more important issue here is if buying the property now is the right decision: a mistake here will make the wrong interest rate look like .....

daveirl

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portomar

berliner wrote: »

read a lot of articles and everything points to a cut.i'd be 80% confident of a cut by the middle of the year.

any of these articles written by economists who work for banks, mortgage lenders, estate agencies, builiding companies or builders trade associations by any chance!?

now, the ECB has no mandate to cut rates to weaken its currency, it has no mandate to cut rates to stimulate growth, it has 1 mandate, and that is price stability, i.e. low inflation. inflation is skyrocketting, led my commodities in particular and also wage demands, particularly public, particularly in Germany. The ecb look like they will follow they're mandate, because they are essentially the bundesbank, only larger and with a french head. The bundesbank were possibly histories most successful central bank, particularly at tackling infaltion. The French central bank, formerly headed by trichet, could be equally as stubborn on rates (one of trichets famous quotes from back in the day was "what has unemployment got to do with me?" when under pressure to cut rates)

The only chink in the armour for people like myself and daveirl who see no prospect of a rate cut in frankfurt is that the ecb is a relativiley new institution who we have never seen in a situation of rapid rate cuts by the us, coupled with high inflation in euro area, so this will test the mettel of their independence from political influence. my gut tells me they will not deviate from their mandate, and hence no rate cut.

as an aside, current uk retail sales show an early indication of high sales in february, if more of the same is seen coupled with high inflation, the BoEs rate cutting cycle may have come to an end already. this would leave the fed all on its own in slashing rates, even in the anglosphere

daveirl

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Diarmuid

daveirl wrote: »

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Agreed.

uberwolf

Trichet has acceded that the exchange rate is a concern. The comment was understood to mean that it fell within ECB remit.

Thomas_S_Hunterson

daveirl wrote: »

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lol

daveirl

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homer911

berliner wrote: »

Oh dear..well at least you tried.Guess i'm in the wrong place for the answer i'm seeking.

Ask a stupid question...

You should have asked what sort of loan: Fixed (and duration), Variable, Tracker, Capped Tracker,...

portomar

daveirl wrote: »

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exactly. also, the meer fact that trichet highlighted it as a concern helped push the dollar higher, i.e. job done without a rate cut.

berliner

homer911 wrote: »

Ask a stupid question...

You should have asked what sort of loan: Fixed (and duration), Variable, Tracker, Capped Tracker,...

I thought it was obvious so I didn't ask.Assuming intelligence!!!

kenco

BOI report today suggesting one possibly two rate cuts before year end.

May or may not happen but the start of this thread was a simple question from a poster looking for advice.....

Afuera

kenco wrote: »

BOI report today suggesting one possibly two rate cuts before year end.

Would you pay the same attention to a report from BMW stating that now is a great time to pick up one of their new cars?

Back in the real world, the head of the ECB is stating that there are no cuts in interest rates on the cards:
http://www.bloomberg.com/apps/news?p...d=ao10ZzjMue8k

portomar

kenco wrote: »

BOI report today suggesting one possibly two rate cuts before year end./QUOTE]

LOL. this the same boi that provides a massive amount of mortgages? i agree whole heartedly with the poster above.

DJDC

Ha interest rate future contracts have moved in a upward direction the last few days with the markets clearly believing the Dec rate to be at 4%.

Makes you wonder about the quality of research analysts working in Irish banks

Turbodreams

seems tracker is the way the go
http://www.independent.ie/business/personal-finance/property-mortgages/over-the-odds-1297942.html

daveirl

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portomar

daveirl wrote: »

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if i was getting a mortgage id actually fix now too, 10 years if i could. i love when people say that we shouldnt be in the euro because we could be cutting rates now with the downturn, when exactly could our central bank sustain 4%!!??

Turbodreams

portomar wrote: »

if i was getting a mortgage id actually fix now too, 10 years if i could.

I personally think you would be mad to fix now but I guess each person has their own opinion. Feel free to say “I told you so” in 10 years though if you want to!

daveirl

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portomar

Turbodreams wrote: »

I personally think you would be mad to fix now but I guess each person has their own opinion. Feel free to say “I told you so” in 10 years though if you want to!

The possible downside to interest rates is about 2% from where they are now (unless we'd face a japanese dysflation scenario, then 4% would be the possible downside but thats unlikely) the upside is how much? 6%, 8%, 12%??

Turbodreams

Maybe it’s a naïve anticipation but im waiting till 3% before considering fixing!

portomar

Turbodreams wrote: »

Maybe it’s a naïve anticipation but im waiting till 3% before considering fixing!

given the economic situation on the continent that brought about interest rates that low, were we to suffer similar, i have a feeling that interst rates might be low on our priorities list!