Inflation rising and effects on the mortgage.

realitykeeper · 30-04-2023 12:08am

https://www.boards.ie/discussion/comment/120537192#Comment_120537192

1.6 + 1.1 - 0.5 = 2.2% over three months. If each of the next three quarters were to have equally high inflation, that will be 2.2 + 2.2 + 2.2 to add to this 2.2, which would total 8.8% over 12 months. Our present inflation is 7.7% for the last 12 months (or 6.3% if the most recent adjustment is correct). But in any case, we will see how the April figure looks when it is decided upon.

My own expectation is for y-o-y inflation to be considderably higher that 8.8% come the end of January, 2024.

walterking · 30-04-2023 7:50am

https://www.boards.ie/discussion/comment/120537502#Comment_120537502

What are your figured based on?

Virtually all commodities have been falling in price (sugar is the outlier). These falls will feed into prices over the next 6-8 months.

Eg, Coal prices will drop by 30% by September, home heating oil has dropped 30% already, gas and electricity have started to drop substantially for business users on market rates and domestic price drops are next.

It is likely that the next 3 months will print negative figures too.

I stand by my January 2024 prediction as fundamentals have not changed

Nigzcurran · 30-04-2023 9:17am

Can someone please ask them to stop raising my interest rate. Please

tom1ie · 30-04-2023 9:21am

https://www.boards.ie/discussion/comment/120537802#Comment_120537802

Will we see drops in food prices though?

How do we know food sellers (not producers) aren’t going to increase profit margins to soak up the gap between production price and selling price?

realitykeeper · 30-04-2023 5:56pm

https://www.boards.ie/discussion/comment/120537802#Comment_120537802

I am using Ireland`s CPI inflation for each month. Is 6.3% or lower, your y-o-y prediction for January 2024?

I will go with 8.8% or higher.

Commodities are not the only cost incurred by businesses. They must also factor in higher interest rates. The nitrates ban will increase food prices and Europe`s energy reserves are now depleted and must be replenished before next winter. Also, Europe buys the most expensive energy, unlike the days when we used to buy it from Russia.

Jim2007 · 30-04-2023 8:02pm

Moving this topic as it is more appropriate for the economics forum.

Geuze · 01-05-2023 9:06pm

Here is the CPI data up to March 2023:

Geuze · 01-05-2023 9:06pm

Flash estimate for HICP for April 2023:

Prices in Ireland estimated to have risen by 6.3% in the 12 months to April 2023

The EU Harmonised Index of Consumer Prices (HICP) for Ireland is estimated to have increased by 6.3% in the 12 months to April 2023 and increased by 0.3% since March 2023.
This compares with HICP inflation of 7% in Ireland in the 12 months to March 2023 and an annual increase of 6.9% in the HICP for the Eurozone in the same period.
Looking at the components of the flash HICP for Ireland in April 2023, energy prices are estimated to have fallen by 1.3% in the month and risen by 12.1% over the 12 months to April 2023.
Food prices are estimated to have increased by 0.5% in the last month and are up by 12.8% in the last 12 months.
The HICP excluding energy and unprocessed food is estimated to have risen by 5.3% since April 2022.
Eurostat will publish flash estimates of inflation from the EU HICP for the Eurozone for April 2023 on 02 May 2023.

realitykeeper · 02-05-2023 7:14pm

Well the rivised inflation figure is in, and not surprisingly it is higher than the initial -0.5% estimate. It is in fact + 0.3%.

So, let us recalculate the inflation for the last three months:

1.6% for January + 1.1% for February + 0.3% for March. That gives us a full 3% inflation. If the next three quarters do not improve, then we can expect y-o-y inflation of 12% come the end of January 2024.

realitykeeper · 02-05-2023 9:05pm

https://www.boards.ie/discussion/comment/120537935#Comment_120537935

I have no doubt a lot of people are asking them to stop raising interest rates. I assume you have a mortgage?

Well, the present dynamic is a fascinating one. The recent surge in stock markets has happened because a lot of people think the central banks will have to stop increasing interest rates and are positioning themselves accordingly. Ironically, the rising interest rates are killing the fundamental value of many of the stocks that are going up on this gambit.

But more to the point, why would the central banks stop raising interest rates when they can point to the strong stock market as a reason to keep going. When investors realise they are the very reason the central banks are not giving up, anything could happen. Investors could dump stocks for example. Then, the central banks will be much more likely to cut interest rates. The next donimos could be the bond markets, followed by currencies.

Geuze · 02-05-2023 9:53pm

https://www.boards.ie/discussion/comment/120547669#Comment_120547669

Here is the all-items HICP:

https://ec.europa.eu/eurostat/databrowser/view/PRC_HICP_MIDX/default/table?lang=en&category=prc.prc_hicp

Euro-20 area

2023-01 = 120.27

2023-04 = 123.16

So over the last three months, inflation in the HICP is 2.4%.

P.E.K.K.A · 03-05-2023 5:59pm

If you need to make a decision on mortgage interest rate today, would you go variable or fixed?

I'm a finance idiot and I'm very well informed but it seems to me like if the forecast expects the rates to keep going up I should take the fixed rates, and if it's expected to go lower I should take variable.

I'm sure it's not the only parameter to keep in mind, but what would be the wisest rate type to take at the moment?

Nigzcurran · 03-05-2023 8:26pm

Yeah unfortunately mine got sold on to pepper, never missed a payment in 15 years of having it but up to nearly 8% now and it’s just crippling us. Don’t earn enough to pass the tests for switching lenders

tom1ie · 03-05-2023 9:30pm

https://www.boards.ie/discussion/comment/120551840#Comment_120551840

8% is a disgrace.

What was the rate before it was sold to pepper and do pepper offer fixed rates?

Is there no cheaper variable rate that they offer?

Can they look at your LTV?

Nigzcurran · 03-05-2023 9:37pm

It was already high enough at around 4% before they bought it, they don’t offer any alternatives whatsoever, I asked them could they do even 5% for 12 months and they said no, they then said I could surrender my home to them and walk away with no further obligations! My ltv is around 75%

Geuze · 03-05-2023 9:41pm

https://www.boards.ie/discussion/comment/120551840#Comment_120551840

Jesus Wept.

8%!!!

Howe could an LTV be 75% after 15 years of repayments?

tom1ie · 03-05-2023 9:43pm

https://www.boards.ie/discussion/comment/120552113#Comment_120552113

Are ya sure about that LTV?

Nigzcurran · 03-05-2023 9:47pm

https://www.boards.ie/discussion/comment/120552140#Comment_120552140

I borrowed €247k in 2008, I still owe €205k in 2023 😁 absolute madness I know, we had crap wages and no credit history so start mortgages were the only people who’d lend to us back then and were charging over 7% at the start so we’ve payed probably €150k in interest already! We’ve been through the recession and covid without ever missing a payment even at those rates yet none of the banks will take us on and let us switch

Geuze · 03-05-2023 9:56pm

God Help You.

"Banks should make it easier to switch back mortgages bought by non-banks after crash" –Finance Minister

https://www.independent.ie/irish-news/banks-should-make-it-easier-to-switch-back-mortgages-bought-by-non-banks-after-crash-finance-minister/a2112165370.html

Geuze · 03-05-2023 9:58pm

I'm trying to think of any way out of that situation.

It seems to me increasing combined incomes is the only solution?

Maybe ask on AAM.

realitykeeper · 27-05-2023 10:15am

Ireland`s CPI inflation for February, March and April was as follows:

1.6 + 1.1 - 0.5 = 2.2% over those three months. In a few days, we will know Ireland`s CPI inflation rate for May and we can add (or subtract) the May figure to that 2.2%. That will give the total inflation for the four months since January.

realitykeeper · 31-05-2023 1:08pm

Okay so Ireland`s CPI inflation has resumed it`s upward tradjectory in May, rising 0.3%.

So that is 1.6 for February, + 1.1 for March, - 0.5 for April, + 0.3 for May. That is 2.5% over 4 months.

It inflation averages the same for the 8 months, that will be 7.5% for the year to January 2024.

Nigzcurran · 31-05-2023 8:59pm

https://www.boards.ie/discussion/comment/120661806#Comment_120661806

but the rate it’s rising at is slowing down each month?

Hotblack Desiato · 01-06-2023 12:43pm

Things are getting worse more slowly 😉

realitykeeper · 01-06-2023 4:33pm

https://www.boards.ie/discussion/comment/120663864#Comment_120663864

It went from -0.5 in April to +0.3 in May. That is worse.

Nigzcurran · 01-06-2023 4:40pm

https://www.boards.ie/discussion/comment/120666902#Comment_120666902

Ah ok thanks

dotsman · 03-06-2023 6:50pm

https://www.boards.ie/discussion/comment/120666902#Comment_120666902

Do you mind me asking where you are getting these figures from?

Eurostat has us at 5.4% (estimate) in May, down from 6.3% in April and 8.3% in May 22. And Eurozone at 6.1% (estimate) in May, down from 7.0% in April and 8.1% in May 22.

https://ec.europa.eu/eurostat/databrowser/view/PRC_HICP_MANR__custom_3761882/bookmark/table?lang=en&bookmarkId=4ad27e6f-358a-4a3d-82a0-587d69a833eb

realitykeeper · 04-06-2023 2:38pm

https://www.boards.ie/discussion/comment/120674528#Comment_120674528

You are looking at year over year figures for each month. I am looking at the estimated inflation for each particural month.

realitykeeper · 01-07-2023 6:12pm

It is difficult to compile monthly inflation for Ireland because the initial estimate is always revised. For example, at the start of June they said inflation in Ireland had risen o.3% in May but later they revised the figure to 0.8%. Now they are saying inflation for June was 0.2% so we will have to wait and see what it really is. Generally, the revised figure is higher than the initial estimates which are what I have been using.

It wouldn`t surprise me if YOY inflation in January 2024 is over 10%.