ECB cuts rates to 2.5% – tracker mortgage interest rates benefit.

Tracker mortgages are a mortgage that is tied to some form of base, be it the ECB base rate or the Euribor, in residential lending it tends to be the ECB in commercial it tends to be the Euribor. Today interest rates were reduced by a further 0.75% giving a new base rate of 2.5%, which is the lowest it has been since March of 2006,the Euribor is now at 3.743% and will see the base rate drop filter through in the coming days.

Commercial loans tend to follow the Euribor, specifically the 3 month money which banks actually tend to use to finance most of their operations. The way that banks operate is to sell long term but finance short term. This is where they create their margin and its based on the yield curve, part of the problem in the last 12 months was a yield curve inversion which made lending difficult and was a …

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Rate Expectations

In the Book Great Expectations by Charles Dickens we saw Pip help out an escaped convict, one who had done some wrong, the convict later becomes an anonymous benefactor of Pip’s helping him lead the life of a gentleman and Pip becomes totally removed from the old life of poverty he lead, only to one day find out who his invisible helper was, it shakes him to the core.

There is something in this story that hit me today hearing about the Fed rate cut to a base of 1% and current public sentiment towards the market. The market is like the convict who had done something wrong in the past and who later is the benefactor. It is easy to look at the mistakes made by the finance industry, and alarmingly easy to funnel all wrongs towards it, …

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Debt Reduction Blog. What happens if you miss mortgage payments? August 16th 2008

A question we are sometimes asked is ‘what do we do if rates rise and we find it hard to make payments?’. The root of the answer lies in not getting into debt you may not be able to service in the first place, having said that the home of your dreams is not always going to be sold at a dream price and many people are feeling an increasing debt burden in 2008. This is down to a slowing economy, redundancies, increased margins on loans, and ECB rate increases.

Today’s post will have some simple tips about money management and ways to avoid bad debt. For a start you need to get a piece of paper and write down guaranteed outgoings, such as mortgages, personal loans, credit cards, groceries etc. If there is a hierarchy in what requires priority food comes first then further down the line debts, for debts (if you ever have to make that choice of which one not to pay) make sure you pay your mortgage first, and personal loans further down the line.

However, …

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Interest Rates: The Fed, The Bank, and the ECB

Interest rates are again in the headlines as the Fed, the Bank of England and the ECB all had meetings. It may be a little known point but in the past there was some currency co-operation, namely the Plaza Accord and two years later the Louvre Accord and although there is no official ‘strategy’ we may start to notice that central banks act with at least some degree of collusion as they try to solve global economic issues. That last sentence might confuse, on one had interest rates are not connected to currency strengths but interest rates do have an effect on inflation and inflation can be brought about by currency manipulation (namely having too much in supply).

The Irish rate of inflation thus far in 2008 dropped from 5% in June to 4.4% according to the Central Statistics Office (CSO) the article in the Times didn’t mention if this was headline or core inflation. It has been our belief for some time that …

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Debt Reduction Blog 6th August 2008

We have decided to start a weekly debt reduction blog, many people are very conscious of their funds and concerned over what way to utilise any money they have. So starting from today we will have some simple advice on debt reduction. Much of it is common sense but some will (hopefully!) be new information.

First, and most importantly you need to map out your finances, and that’s not as simple as saying ‘I have a current account, a savings account and a few quid with the Credit Union’, by this I mean really getting into your finances and what you are spending money on, account statements, credit card statements and also some idea of any miscellaneous expenses you might have.

Once that’s done you can sit down with a person who is a professional (this can be your broker or accountant), in some cases even a friend who knows more than you do is better than trying to go it alone if you are not financially literate (about which we’ll get back to later). Then you have to examine …

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ECB Base rate increased 0.25% to 4.25% today

The ECB (European Central Bank) changed its base rate today to 4.25% which is an increase of 0.25%, the previous base rate of 4% had been left unchanged since its inception in June of 2007.

The move, while not favoured by borrowers, is vital in order to control Eurozone inflation which has been running well above the ‘at or just below 2%’ level that the ECB has intended to adhere to. In the first quarter of the year many commentators were saying that they believed we would see a rate reduction in the summer, this blog on the other hand argued otherwise in articles which were posted in mid March and again in mid April. As recently as May professional commentators (our crew is more along the line of humble observers!) …

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The curse of 'F' words.

At the moment we are seeing two ‘F’ words which are inflating rapidly, namely, Food and Fuel.

In todays post we will look at the positive effects of fuel and food prices shooting through the roof, and how people can turn this to their advantage. Fuel prices have really shot up in the last year, in fact a year ago the fuel prices were in the mid $50 per barrell range and at this point an analyst from Goldman Sachs (Arjun Murti)had said that we would see $100 a barrel oil soon and he was laughed at, then it came true and suddenly Mr. Murti went from ridiculed to divinity.

Then the man who seems to be able to predict the future went on the record talking about $200 a barrel oil and that sent a shiver down the spine of every oil consumer. In 2005 there were …

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The curse of ‘F’ words.

At the moment we are seeing two ‘F’ words which are inflating rapidly, namely, Food and Fuel.

In todays post we will look at the positive effects of fuel and food prices shooting through the roof, and how people can turn this to their advantage. Fuel prices have really shot up in the last year, in fact a year ago the fuel prices were in the mid $50 per barrell range and at this point an analyst from Goldman Sachs (Arjun Murti)had said that we would see $100 a barrel oil soon and he was laughed at, then it came true and suddenly Mr. Murti went from ridiculed to divinity.

Then the man who seems to be able to predict the future went on the record talking about $200 a barrel oil and that sent a shiver down the spine of every oil consumer. In 2005 there were …

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What are the best mortgage rates? Mortgage Interest Rates explained.

What are the best Irish mortgage rates? What are interest rates and where do they come from? These are all good questions and in today’s post I hope to answer some of them.

Often I find that people call me and ask ‘what’s the best rate’ and then there is silence on the other end of the phone as they await an answer. The truth is that at any given time there is a ‘best mortgage rate’ out there, but normally there are restrictions surrounding it which inhibit the ability for most borrowers to avail of them.

We have come out of eight rate hikes which began at the end of 2005, and in an upward rate market people often feel that their old loan has become expensive, in fact it’s not necessarily the case that the ‘old loan’ is exceptionally dear, its that the rate market has gone up and therefore the cost of all loans has gone up, when we talk about the greater ‘debt burden’ that’s what we are referring to, because car loans, higher purchase, leases, …

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Talk the Talk (part 2)

As part of the ethics in writing this article I made a decided point of not actually reading my initial article so there is no way of knowing if in general I was right or wrong. Anyways, I am pleased to present the second installment and can only say at this point that I hope my integrity is intact come the end of it all. The numbers and the paragraphs below them are the originals from the article at the end of 2005, the Result & Humiliation score are todays take on what actually happened since they were written.

6. Product or client specific lenders

We have already spoken about ‘sub-prime’ lenders, this is product or client specific lending based on a pre-set target market, but who’s to say it shouldn’t work both ways? What about a lender who deals only with people who earn over €100,000 or who have a net worth of €1,000,000? Previously this may have been the stock and trade of the ‘private banking’ wing of certain banks but there is scope for this type of …

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