30 year Irish bonds: What it means for the mortgage market

In the USA the 30yr Treasury is often called the ‘long bond’ and it is watched (the yields) very closely as it is the indication on long term rate expectations from within the market. If the NTMA issue 30 year bonds as suggested by today’s Independent it could bring about an important development that we have been advocates of for some time, namely, that of long term fixed rate mortgages.

Banks have a certain level of ‘zero rated funds’, this is money that is not incurring cost in terms of interest payments to the customer, they generally tend to come about in current accounts. Many people keep a certain amount of money in a current account from month to month, when you add all of this together across the institution there is normally a certain foundation or base level of funds constantly there. The zero rated funds are generally where the funding area where fixed rates come from, and the fixed rate mortgage prices are based upon a comparable (normally a sovereign …

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Inflation… ‘when’ not ‘if’…

The endurance of gold at above $900, rising oil prices, the weakening dollar and a Treasury/Fed combo that is increasing the money in circulation will lead us where?

I hate to harp on about inflation but it just doesn’t seem that further down the line we won’t see a lot of it, the market is pricing it in, the yield curve is suggesting it, and yet it remains on the periphery of commentary for the most part.

One important statement in this talk is the bit where one of the guys talks about the fractional reserve system and the multiplier effect that can turn 800+ billion into 8 trillion.

When we are advising longer term fixed rates to avoid the pain this will bring (and it won’t be in 09′, it will be 10′ or 11′ but rest assured it will come), bear in mind that in the short term you will pay more than you have to, but that when everybody else is hurting you will be insulated. The reason for fixing now rather than later is that the …

Read More

Inflation… 'when' not 'if'…

The endurance of gold at above $900, rising oil prices, the weakening dollar and a Treasury/Fed combo that is increasing the money in circulation will lead us where?

I hate to harp on about inflation but it just doesn’t seem that further down the line we won’t see a lot of it, the market is pricing it in, the yield curve is suggesting it, and yet it remains on the periphery of commentary for the most part.

One important statement in this talk is the bit where one of the guys talks about the fractional reserve system and the multiplier effect that can turn 800+ billion into 8 trillion.

When we are advising longer term fixed rates to avoid the pain this will bring (and it won’t be in 09′, it will be 10′ or 11′ but rest assured it will come), bear in mind that in the short term you will pay more than you have to, but that when everybody else is hurting you will be insulated. The reason for fixing now rather than later is that the …

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Rock bottom, when you reach it, you won’t know it

Capitulation, the point in the market cycle of emotions when right before despondency. Despondency is actually the point of the opportunity for greatest profit, and reaching that point requires going through a painful process. The primary factor is that before any recovery we will need to see all of the dead-wood clear from the system, and that is not a pleasant process, it is however, an important part of the process and anybody who says we can have ‘painless recovery’ is not telling the truth.

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Rock bottom, when you reach it, you won't know it

Capitulation, the point in the market cycle of emotions when right before despondency. Despondency is actually the point of the opportunity for greatest profit, and reaching that point requires going through a painful process. The primary factor is that before any recovery we will need to see all of the dead-wood clear from the system, and that is not a pleasant process, it is however, an important part of the process and anybody who says we can have ‘painless recovery’ is not telling the truth.

Read More